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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended March 31, 2026
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 001-35159
THERMON GROUP HOLDINGS, INC.
(Exact name of registrant as specified in its charter)

Delaware |  |  |  |  |  | 27-2228185
(State or other jurisdiction of incorporation or organization) |  |  |  |  |  | (I.R.S. Employer Identification No.)
7171 Southwest Parkway, |  |  |  |  |  | 78735
Building 300, | Suite 200, |  |  |  |  | (Zip Code)
Austin, | Texas |  |  |  |  |
(Address of principal executive offices) |  |  |  |  |  |

(512) 690-0600
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:

Title of each class |  | Trading Symbol(s) |  | Name of each exchange on which registered
Common Stock, $0.001 par value per share |  | THR |  | New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. x Yes ¨ No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. ¨ Yes x No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes ¨ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). x Yes ¨ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer | x |  | Accelerated filer | o
Non-accelerated filer | o |  | Smaller reporting company | ☐
|  |  | Emerging growth company | ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C.7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ¨
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes x No
The aggregate market value of the registrant's common equity held by non-affiliates as of September 30, 2025, was $851,698,290 based on the closing price of $26.72 as reported on the New York Stock Exchange. Solely for the purposes of this calculation, directors and officers of the registrant are deemed to be affiliates.
As of May 20, 2026, the registrant had 32,939,694 shares of common stock, par value $0.001 per share, outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
As permitted by General Instruction G of Form 10-K, certain portions, as expressly described in this report, of the registrant's Definitive Proxy Statement for the 2026 Annual Meeting of Stockholders to be filed with the SEC are incorporated by reference into Part III of this Annual Report on Form 10-K.

THERMON GROUP HOLDINGS, INC.
ANNUAL REPORT
FOR THE FISCAL YEAR ENDED MARCH 31, 2026
TABLE OF CONTENTS

| Page
PART I |
ITEM 1 BUSINESS | 1
ITEM 1A RISK FACTORS | 10
ITEM 1B UNRESOLVED STAFF COMMENTS | 21
ITEM 1C CYBERSECURITY | 21
ITEM 2 PROPERTIES | 22
ITEM 3 LEGAL PROCEEDINGS | 22
ITEM 4 MINE SAFETY DISCLOSURES | 22
PART II |
ITEM 5 MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES | 23
ITEM 6 RESERVED | 25
ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 25
ITEM 7A QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 34
ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA | 37
ITEM 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE | 74
ITEM 9A CONTROLS AND PROCEDURES | 75
ITEM 9B OTHER INFORMATION | 75
ITEM 9C DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS | 75
PART III |
ITEM 10 DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE | 76
ITEM 11 EXECUTIVE COMPENSATION | 78
ITEM 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS | 78
ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE | 78
ITEM 14 PRINCIPAL ACCOUNTANT FEES AND SERVICES | 79
PART IV |
ITEM 15 EXHIBITS AND FINANCIAL STATEMENT SCHEDULES | 80
ITEM 16 FORM 10-K SUMMARY | 82
SIGNATURES | 83

i

FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K ("this annual report") includes forward-looking statements within the meaning of the U.S. federal securities laws in addition to historical information. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are included throughout this annual report, including in the sections entitled "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Business" and include, without limitation, statements regarding our industry, business strategy, plans, goals and expectations concerning our market position, future operations, margins, profitability, capital expenditures, liquidity and capital resources and other financial and operating information. When used in this discussion, the words "anticipate," "assume," "believe," "budget," "continue," "contemplate," "could," "should," "estimate," "expect," "intend," "may," "plan," "possible," "potential," "predict," "project," "will," "would," "future" and similar terms and phrases are intended to identify forward-looking statements in this annual report.
Forward-looking statements reflect our current expectations regarding future events, results or outcomes. These expectations may or may not be realized. Some of these expectations may be based upon assumptions, data or judgments that prove to be incorrect. In addition, our business and operations involve numerous risks and uncertainties, many of which are beyond our control, which could result in our expectations not being realized or otherwise materially affect our financial condition, results of operations and cash flows. These forward-looking statements include but are not limited to statements regarding: (i) our plans to strategically pursue emerging growth opportunities, including strategic acquisitions, in diverse regions and across industry sectors and including the Merger (as defined below) with CECO Environmental Corp.; (ii) our plans to secure more new facility project bids; (iii) our ability to generate more facility maintenance, repair and operations or upgrades or expansions revenue from our existing and future installed base; (iv) our ability to timely deliver backlog; (v) our ability to respond to new market developments and technological advances; (vi) our expectations regarding energy consumption and demand in the future and its impact on our future results of operations; (vii) our plans to develop strategic alliances with major customers and suppliers; (viii) our expectations that our revenues will increase; (ix) our belief in the sufficiency of our cash flows to meet our needs for the next year; (x) our ability to integrate acquired companies; (xi) our ability to successfully achieve synergies from acquisitions; and (xii) our ability to make required debt repayments.
Actual events, results and outcomes may differ materially from our expectations due to a variety of factors. Although it is not possible to identify all of these factors, they include, among others, (i) our ability to complete the Merger with CECO Environmental Corp.; (ii) the incurrence of significant direct and indirect costs as a result of the transaction with CECO Environmental Corp.; (iii) the possibility that we may be subject to lawsuits relating to the Merger with CECO Environmental Corp.; (iv) market price fluctuations and uncertainty in the market value of consideration that our common stock holders will receive in the Merger with CECO Environmental Corp.; (v) future growth of our key end markets and related capital investments; (vi) our ability to operate successfully in foreign countries; (vii) uncertainty over and changes in administrative policy; (viii) general economic conditions and cyclicality in the markets we serve; (ix) our ability to successfully develop and improve our products and successfully implement new technologies; (x) competition from various other sources providing similar heat tracing and process heating products and services, or alternative technologies, to customers; (xi) our ability to deliver existing orders within our backlog; (xii) our ability to bid and win new contracts; (xiii) the imposition of certain operating and financial restrictions contained in our debt agreements; (xiv) our revenue mix; (xv) our ability to grow through strategic acquisitions; (xvi) our ability to manage risk through insurance against potential liabilities; (xvii) changes in relevant currency exchange rates; (xviii) tax liabilities and changes to tax policy; (xix) impairment of goodwill and other intangible assets; (xx) our ability to attract and retain qualified management and employees, particularly in our overseas markets; (xxi) our ability to protect our trade secrets; (xxii) our ability to protect our intellectual property; (xxiii) our ability to protect data and thwart potential cyber-attacks and incidents; (xxiv) a material disruption at any of our manufacturing facilities; (xxv) our dependence on subcontractors and third-party suppliers; (xxvi) our ability to profit on fixed-price contracts; (xxvii) the credit risk associated with our extension of credit to customers; (xxviii) our ability to achieve our operational initiatives; (xxix) unforeseen difficulties with expansions, relocations, or consolidations of existing facilities; (xxx) potential liability related to our products as well as the delivery of products and services; (xxxi) our ability to comply with foreign anti-corruption laws; (xxxii) export control regulations or sanctions; (xxxiii) environmental and health and safety laws and regulations as well as environmental liabilities; and (xxxiv) climate change and related regulation of greenhouse gases. Any one of these factors or a combination of these factors could materially affect our future results of operations and could influence whether any forward-looking statements contained in this annual report ultimately prove to be accurate. See also Item 1A, "Risk Factors" for information regarding the additional factors that have impacted or may impact our business and operations.
Our forward-looking statements are not guarantees of future performance, and actual results and future performance may differ materially from those suggested in any forward-looking statements. We do not intend to update these statements unless we are required to do so under applicable securities laws.
ii

iii

PART I
References in this annual report to "we," "our," "us," the "Company," or "Thermon" mean Thermon Group Holdings, Inc. and its consolidated subsidiaries taken together as a combined entity. A particular fiscal year is the twelve months ended on March 31 of the given calendar year (e.g., "fiscal 2026," "fiscal 2025" and "fiscal 2024" relate to the Company's fiscal years ended March 31, 2026, March 31, 2025, and March 31, 2024, respectively). Thermon Group Holdings, Inc. is a holding company that conducts all its business through its subsidiaries, and its common stock is listed on the New York Stock Exchange under the symbol "THR."
ITEM 1. BUSINESS
Business Overview
We are one of the largest providers of highly engineered industrial process heating solutions for process industries. For over 70 years, we have served a diverse base of thousands of customers around the world in attractive and growing markets, including general industrial, chemical and petrochemical, oil, gas, power generation, commercial, food and beverage, rail and transit, and other, which we refer to as our "key end markets." We offer a full suite of products (heating units, electrode and gas-fired boilers, heating cables, industrial heating blankets and related products, temporary power solutions and tubing bundles), services (engineering, installation and maintenance services) and software (design optimization and wireless and network control systems) required to deliver comprehensive solutions to some of the world's largest and most complex projects. With a legacy of innovation and continued investment in research and development, Thermon has established itself as a technology leader in hazardous or classified areas, and we are committed to developing sustainable solutions for our customers. We serve our customers through a global network of sales and service professionals and distributors in more than 30 countries and through our 11 manufacturing facilities on two continents. These global capabilities and longstanding relationships with some of the largest multinational oil, gas, chemical processing, power and engineering, procurement and construction ("EPC") companies in the world have enabled us to diversify our revenue streams and opportunistically access high-growth markets worldwide.
Our corporate offices are located at 7171 Southwest Parkway, Building 300, Suite 200, Austin, Texas 78735. Our telephone number is (512) 690-0600. Our website address is www.thermon.com. Copies of the charters of the committees of our board of directors, our code of business conduct and ethics and our corporate governance guidelines are available free of charge on our Investor Relations website located at http://ir.thermon.com. All reports that we have filed with the Securities and Exchange Commission ("SEC"), including this Annual Report on Form 10-K and our Current Reports on Form 8-K, can be obtained free of charge from the SEC's website at www.sec.gov or through our Investor Relations website. In addition, all reports filed with the SEC may be read and copied at the SEC's Public Reference Room at 100 F Street, NE, Washington, D.C. 20549-1090. Information regarding the operation of the public reference room may be obtained by calling the SEC at 1-800-SEC-0330. None of the information on our website or any other website identified herein is incorporated by reference in this annual report and should not be considered a part of this annual report.
1

Pending Merger with CECO Environmental Corp.
On February 23, 2026, the Company entered into a definitive merger agreement (the “Merger Agreement”) with CECO Environmental Corp. (“CECO”) to combine the two companies in a stock‑and‑cash two-step merger transaction valued at approximately $2.2 billion (the “Merger”). The Merger is expected to create a global industrial leader in mission‑critical environmental and thermal solutions by combining CECO’s capabilities in environmental systems with the Company’s leadership in industrial process heating, heat tracing, and temperature management. Upon completion of the Merger, which is subject to customary closing conditions and regulatory and stockholder approvals, the combined company will operate under the CECO Environmental Corp. name and is expected to benefit from enhanced scale, expanded product offerings, and increased exposure to long‑term secular growth trends. The transaction is expected to close in June 2026. See also “Risks Relating to the Pending Merger with CECO Environmental” under Item 1A, “Risk Factors” for information regarding the additional risk factors related to the Merger.
The Company has incurred, and anticipates incurring additional, significant transaction‑related costs in connection with the Merger, including legal, accounting, financial advisory, and other professional fees. Refer to Note 14, “Commitments and Contingencies," included in the consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10‑K.
Sales
Heat Tracing
We offer heat tracing solutions for maintaining pipe, vessel, and foundation temperatures in industrial and hazardous locations as well as in commercial applications. Our solutions include software automated engineering design services, industry leading heat tracing products, smart connected control and monitoring systems, construction services, and maintenance services. Applications include process temperature maintenance, freeze protection, vessel temperature maintenance, tank temperature maintenance, and foundation heating for energy, commercial, transportation, semiconductor, and food & beverage industries.
Our tubing bundle solutions include bundle design services, heated and insulated sample lines for process control and instrumentation, and continuous emissions sampling lines for regulatory required environmental emissions monitoring and enforcement. We believe this capability allows us to offer products which help our customers with important sustainability practices, such as measuring emissions and complying with related regulatory requirements.
Our temporary power systems provide portable, flexible, and hazardous area rated electrical connection systems and LED lighting that provide the power infrastructure for workers in construction zones and projects for industrial plants and facilities.
Our heated blankets are built upon patented heat-spreading technology. We are a leading expert in temperature control that provides patented standard and custom-made heating products, and we operate an industrial heating e-commerce website.
Our products and services include a wide range of electric heat tracing cables, steam heating solutions, controls, monitoring and software, instrumentation, project services, industrial heating and filtration solutions, temporary electrical power distribution and lighting, and other complementary products and services.
Controls, Monitoring and Software
Our solutions include smart, connected devices and software systems for the control and management of a customer’s heat trace system. We offer a range of Genesis and TraceNet control products from a single point controller to a high-capacity multi-point control panel. All our controllers and panels can be networked together via wired or wireless communication into a large control solution with capacity to manage over 30,000 heat trace circuits within the same customer facility, including controls systems sold by other heat tracing Original Equipment Manufacturers ("OEMs"). Our systems can be integrated with a plant’s central data management and control system. Advanced control systems enable lower cost and reduced emissions at many of our end-user sites.
Our controls and plant management software are built upon the internet of things ("IOT") technology that can be deployed locally within the secure plant environment. Our smart devices utilize the latest touch technology and industry leading intuitive user interfaces. Users familiar with smart phones and tablets find our latest controllers intuitive to learn and use because of the similarities. These technologies also form a platform for offering easy automatic upgrades and additional value-added services. We believe our control solutions are the most advanced, reliable and easy-to-use monitoring solutions in the marketplace.
Process Heating
2

Thermon Heating Systems, or "THS," develops, designs and manufactures the following high quality and durable advanced industrial heating and filtration solutions, including the following categories:
•Environmental heating (branded as "Ruffneck," "Norsemen," and "Catadyne") - provides electric or gas-powered space heating for both hazardous and non-hazardous areas;
•Process heating - provides highly engineered heating products to multiple end-markets with the purpose of heating and maintaining a process fluid at specified temperatures. Some products also serve the transportation sector with both radiant and convection-style heating;
•Filtration (branded as "3L Filters") - provides highly specialized filtration solutions for the most stringent environments, including the nuclear industry;
•Rail and Transit (branded as "Hellfire," "Velocity," "ArcticSense" and others) - provides heating applications to both rolling stock (rail cars) and rail infrastructure (track and switch) and;
•Boilers (branded as “Vapor Power,” “Precision Boilers,” and “Caloritech”) – provides electric resistance, electrode, and fired coil tube boilers across commercial and multiple industrial end-markets.
•Liquid Load Banks (branded as "Pontus" or "Poseidon") - designed to simulate real-world thermal and electrical demands for validating critical data center and high-performance computing infrastructure. These systems are essential for testing components such as coolant distribution units, uninterruptible power supplies, and backup generators during commissioning and startup.
Project Services
As a manufacturer and global expert in process heating solutions, our EPC and end-user customers often rely on Thermon to deliver a range of project services, which may include:
•Engineering and design;
•Procurement and project management services;
•Turnkey construction installation;
•Recurring facility assessment or audit; and
•Maintenance services.
Our customers rely on Thermon’s design and engineering expertise on projects around the world. These services are combined with our heat tracing and process heating products under one contract to deliver an integrated solution that improves the overall value proposition for the customer. By delivering design drawings in conjunction with early project specifications, we can address our customers' needs for design optimization studies, product selection assistance and computer-generated drawing packages. Often these are new facilities, but they may also include upgrades or expansions and maintenance projects where our existing customers are upgrading their facilities. Project services are important to our business model and growth strategy to secure contracts that both establish and enhance new and existing customer relationships.
Our services are automated by custom software technology. We have developed software that assists our experts in the design, specification, and automatic creation of CAD drawings. Our project engineering staff empowered with this software technology can execute the largest projects, including the creation of thousands of drawings, accurately and with efficiency that cannot be matched by manpower alone.
Project services also include full turnkey solutions whereby we contract to install a complete heat tracing or process heating solution. We refer to this as our construction business which is primarily located in the southern U.S. near many of our customers in the downstream and mid-stream petroleum, chemical and power generation industries.
We have expanded our electrical heating portfolio to include medium voltage heating solutions, which operate at significantly higher voltages than traditional process heaters and are designed to deliver higher efficiency, higher power density, a smaller physical footprint, and lower installation costs for large industrial and infrastructure applications. These medium voltage products leverage our existing engineering, certification, and manufacturing capabilities and support customer demand driven by electrification, decarbonization, and large‑scale capital projects.
Manufacturing and Operations
We have 11 manufacturing facilities and two smaller assembly facilities, which complement our manufacturing operations. Most of our heat tracing products are manufactured in our facility in San Marcos, Texas, including flexible heating cables, control systems and tubing bundles. Process heating products are primarily manufactured at our Canadian facilities, which include: Calgary, Edmonton, Fort McMurray, Oakville, and Orillia. We have other various manufacturing locations in
3

Salt Lake City, Utah; Chicago, Illinois; Morristown, Tennessee; Pijnacker, the Netherlands; and Cusago, Italy. We have assembly locations in Pune, India and Houston, Texas. We maintain a high level of operational efficiency and excellent quality standards in all our manufacturing facilities through the use of automated processes and rigorous quality control checkpoints and procedures.
Our San Marcos, Texas operation includes an electron cross-linking facility that is used to stabilize the resin material in our low-temperature self-regulating heating cables. Ownership of this operation allows us to have complete control of the manufacturing process, enhancing quality and reducing lead time. Some of the base heating cable that is produced in San Marcos is shipped to our different sites to reduce lead time and to satisfy local content requirements.
Pre-insulated tubing bundles are manufactured in our facilities in San Marcos, Texas and Pijnacker, the Netherlands and are primarily made to the individual customer’s specifications. The process includes application of a thermal insulation over one or more process tubes, along with an electric heat trace cable or steam heating tube, and a protective plastic outer jacket that is extruded onto the bundle to protect the insulation.
Our process heating solutions are manufactured in various plants in Canada. The Edmonton facility largely manufactures environmental heating products. The Orillia facility manufactures tubular heaters, including our mineral insulated ("MI") heating cable that is supplied to OEM customers and other Thermon facilities. The Oakville location specializes in our engineered solutions and our Calgary facility fabricates electric heat trace circuits using the MI cable produced in Orillia. Thermon Power Solutions is a product line that provides temporary power distribution and lighting products that are primarily fabricated at a facility in Fort McMurray, Alberta, Canada.
Thermon transportation heating products are assembled at our facilities in Edmonton, Alberta. We have expanded assembly capabilities at our San Marcos, Texas facility to include solutions for rail car heating and rail track heating.
Our heated blankets and related products are manufactured and shipped at our Salt Lake City, Utah facility, which also serves as our headquarters for the Powerblanket brand.
Our electric resistance, electrode and supercritical coil tube boilers and steam generators are manufactured in our Chicago, Illinois or Morristown, Tennessee locations. Our Pontus and Poseidon liquid load bank products are manufactured in Morristown, Tennessee. We also manufacture electrical heaters and heating systems for a broad range of industrial end markets at our Cusago, Italy facility.
Our primary distribution centers are located in San Marcos, Texas; Calgary, Alberta; and Pijnacker, the Netherlands. Inventory is typically shipped from these distribution centers directly to customers, the construction site or our regional sales agents or distributors. Our sales agents may maintain "safety stocks" of core products to service the immediate maintenance and repair requirements of customers who are time-sensitive and cannot wait for delivery from one of the central distribution centers. In the U.S., a network of representatives maintain safety stocks of core products. In Canada, customers are serviced from the five manufacturing locations in Calgary, Edmonton, Fort McMurray, Oakville and Orillia. In Europe, customers are serviced from the central distribution center in the Netherlands. In Asia, safety stock of materials is kept in Yokohama, Japan; Seoul, Korea; Shanghai, China; Pune, India; and Melbourne, Australia. Safety stocks are also warehoused in Mexico City, Mexico. Thermon aims to have inventory available close to the customer to fulfill urgent needs.
Customers
We serve a broad base of large multinational customers, many of which we have served for over 70 years. We have a diversified revenue mix with thousands of customers. None of our customers represented more than 10% of total revenue in fiscal 2026, 2025, or 2024.
Marketing
Our direct sales force is focused on positioning us with major end-users and EPC companies during the development phase of large projects with the goal of providing reliable, cost-effective process heating solutions. We utilize a network of more than 100 independent sales agents and distributors in over 30 countries to provide local support to customer facilities for maintenance, repairs and upgrades. In addition to focused EPC sales, Thermon is actively engaged in commercial strategies to address a diversified mix of customers in our key end markets. Revenue diversification is a key long-term strategic initiative for the business. As of March 31, 2026, approximately 70% of our revenue was derived from non-oil-and-gas end markets. We believe that we have established our credibility as a reliable provider of high-quality process heating products. In addition, we believe that our registered trademarks in the U.S. and numerous additional brand names are recognized globally, giving us excellent brand recognition.
Standards and Certifications
Thermon’s research and development practices ensure our product designs are validated to market requirements and verified to comply with applicable industry standards. We actively participate in the growth and development of the domestic
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and international electrical standards established in the countries in which we sell products. We continually test our products through a quality control process to demonstrate they can withstand harsh operating environments. They are subjected to various tests, including heat output, thermal stability and long-term aging, with the goal of producing products capable of performing at or beyond the expectations of our customers. All products are further tested and certified for global use by various approval agencies, such as UL, CSA, FM, and ETL, to meet industry leading international standards.
In order to support the design and development of industrial products rated for operation in potentially hazardous environments, Thermon holds quality system approvals which employ the appropriate oversight requirements. To support the international business, Thermon is audited annually by an Ex Certification Body such as DEKRA, and we hold a Quality Assurance Notification and Quality Assurance Report to IEC/ISO 80079-34. To support the North American business, Thermon is audited quarterly by many nationally recognized test labs including but not limited to UL, CSA, FM, and ETL, OSHA and Standards Council of Canada requirements. In addition, Thermon pursues various regional and maritime certifications such as DNV, ABS, EAC, KOSHA and many more. In addition, all of our manufacturing facilities are ISO 9001 certified, which allows us to continue to produce safe, reliable products certified for operating in potentially hazardous environments.
Over the last three decades, Thermon has made significant investments to actively participate in standardization at the national and international level. We are active in several committees such as the National Electrical Code (NEC), Canadian Electrical Code (CEC), American National Standards Institute (ANSI), National Electrical Equipment Manufacturers Association (NEMA), and the International Electrotechnical Commission (IEC). We leverage our extensive expertise and knowledge in industrial process heating technology to continually improve the applicable standards of our industry.
Markets
The major end markets that drive demand for process heating include general industrial and other, oil, chemical and petrochemical, commercial, gas, power generation, rail and transit, and food and beverage. We believe there are attractive long-term trends in each of these end markets. In addition, our products are increasingly being leveraged in the energy transition as industry looks to electrification as a means of decarbonizing operations. The primary energy transition end markets and applications include, but are not limited to, biofuels, hydrogen, thermal energy storage, and carbon capture.
•General Industrial and Other. We serve a growing number of other markets where we add value for customers, such as mining and mineral processing, maritime/shipbuilding, semiconductors, pharmaceutical and biotechnology, data center, and renewables.
•Oil. Process heating and freeze protection is used to facilitate the exploration, production, processing, transportation and distribution of oil and oil-based energy products in upstream, midstream, and downstream oil applications. While the demand forecast for oil can be unpredictable, we have a sizable installed base that provides recurring revenue, especially in the downstream refining market.
•Chemical and Petrochemical. Process heating is required for temperature maintenance and freeze protection in a variety of chemical processing applications. Factors that may impact process heating demand in chemical and petrochemical end markets include the rapid industrialization of the developing world, a shift in base chemical processing operations to low-cost feedstock regions, a transition of Western chemical processing activities from commodity products to specialty products and environmental compliance.
•Commercial. Heating is required for hospitals, hospitality/lodging, universities and secondary education, and light industrial facilities to provide freeze protection, temperature regulation, process control, and supporting laboratory environments. The electrification of heating products and removal of combustion-based heating solutions in urban areas drives demand for our products.
•Gas. Process heating and freeze protection is used in the production and transmission of gas in upstream, midstream, and downstream applications. Despite recent market volatility, gas markets have remained resilient over the last twelve months, especially as a feedstock for petrochemical plants, and represent a significant and growing addressable market for our value-added solutions. This includes the global and growing market for liquefied natural gas (LNG) compression and regasification facilities, which has been accelerated by the war in Ukraine and the resulting need for Europe to reduce reliance on Russian oil and gas.
•Power Generation. Heating is required for high-temperature product maintenance, freeze protection and environmental regulation compliance in coal and gas facilities and for safety systems in nuclear facilities. An important driver of demand for process heating solutions for power generation is increasing demand for electricity worldwide, which is accelerating due to increased power demand from data centers and artificial intelligence applications.
•Rail and Transit. Heating is required to safely clear and heat rail switches, melt snow and ice from platforms, and provide comfort heating and defrosting in rolling stock. With over 1.1 million kilometers of operational railway in the world, rail is still one of the most economical and safe solutions for passengers and products globally.
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•Food and Beverage. The ability to process food and beverage safely, and the process of altering raw agricultural materials into products for intermediate or final consumption, is essential to our society. Thermon is proud to offer heating solutions for food and beverage processing applications. We offer safe, reliable products and services for food and beverage processing organizations.
Our ability to provide technology design, such as wireless network controls and design software, is an increasing factor in our customers' decision to purchase our products. Additionally, regulatory and societal pressures and cost competitiveness are increasingly leading our customers to invest in decarbonization technologies that help reduce their carbon emissions. Electrification of process heating is a trend we are benefiting from across all of our existing end markets, and the adoption of new technologies is providing additional opportunities in new end markets. Examples include, but are not limited to, biofuels, hydrogen, thermal energy storage, and carbon capture. We have existing products that are able to address the demand stemming from these new end markets. Further, data centers are considered critical infrastructure and process heating is required in the commissioning, operation, and maintenance of these facilities for applications including load bank testing and freeze protection. The rapid build out of data centers globally driven by advancements in artificial intelligence serves as the underlying demand driver in this end-market.
Segments
We operate in four reportable segments based on four geographic countries or regions in which we operate: (i) United States and Latin America ("US-LAM"), (ii) Canada, (iii) Europe, Middle East and Africa ("EMEA") and (iv) Asia-Pacific ("APAC"). See Note 18, "Segment Information" for financial data relating to our four reportable geographic segments.
Competition
The global industrial electric heat tracing industry is fragmented and consists of more than 30 companies, which typically only serve discrete local markets and provide a limited-service offering. We believe that we are the second largest participant in the industrial electric heat tracing market and one of only a few solution providers with a comprehensive suite of products and services, global capabilities, and industry-leading controls technology, which includes our design software products. Our most significant competitor is Chemelex.
The industrial process heating market, tends to be fairly fragmented with several smaller companies serving discrete local markets with limited offerings. Our competitors vary by end-market, but generally we view Chemelex, NIBE, Watlow and Spirax Group as competitors in various areas across the spectrum of end-markets we serve.
Industrial process heating providers differentiate themselves through value-added services, long-term customer relationship management and the ability to provide a full range of solutions. We differentiate ourselves from local providers by maintaining a global footprint, a full suite of products and services and a track record with some of the largest multinational energy, chemical processing, power and EPC companies in the world. In addition, we are almost entirely dedicated to providing thermal solutions and complementary products and services whereas some of our competitors' thermal solutions operations constitute only one of numerous operating segments.
Intellectual Property and Technology
The industrial process heating industry, as well as the complementary markets where we intend to expand, are highly competitive and subject to the introduction of innovative techniques and services using new technologies. While we have patented some of our products and processes, we historically have not relied upon patents to protect our design, manufacturing processes or products, and our patents are not material to our operations or business. Instead, we rely significantly on maintaining the confidentiality of our trade secrets, manufacturing know-how, other proprietary rights and other information related to our operations. Accordingly, we require all employees to sign a nondisclosure agreement to protect our trade secrets, business strategy and other proprietary information. We rely on registered and unregistered trademarks in the U.S. and abroad and have many recognized brand names.
Our research and development activities are focused on identifying new technologies to enhance our industrial process heating solutions and meet the evolving needs of our customers. This maximizes safety and product reliability and reduces the customer's total cost of ownership, which consists of capital expenses, maintenance costs and energy costs. Current product development initiatives include polymer research, computational fluid dynamics to enhance our heating solutions, and continued advancement of integrated control and monitoring systems. Software development activities include advanced heat tracing network monitoring communication software and engineering design software initiatives.
Resources
Our critical raw materials include polymers, graphite, copper and stainless steel. For most of these materials, we purchase from multiple suppliers to avoid any potential disruption of our manufacturing operations. For a small number of raw material items that require specific quality specifications, we have single source supply arrangements. We manage the inherent supply risk through purchase contracts and increased safety stock levels. We evaluate pricing and performance of all suppliers
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annually. For our low volume custom-built electronic controller components, we select a single supplier based on past performance reliability and closely monitor the process as volumes are too low to divide this product over multiple suppliers. More than half of the components we purchase by cost are off-the-shelf items and are readily available from multiple sources. Our purchase specifications are usually based on industry or manufacturer standards. Testing of the raw materials is performed and documented by our suppliers and is reviewed by us at the time of receipt. While our manufacturing locations are predominantly in North America, we operate an “in country, for country” strategy to diversify our supplier base, manage costs and hold inventory across our various sites. We employ a screening mechanism for conflict materials as part of our supplier approval and management processes. Use of tin, tungsten, tantalum and gold (3TG) in our purchased components is minimal. We have established a process to collect and report conflict minerals use in order to meet all regulatory and customer requirements. We use limited amounts of magnesium, graphite and platinum in our processes and these commodities are sourced from multiple suppliers to ensure availability. The quantities we consume of these materials are insignificant compared to the global production and usage.
Government Contracts
We do not have any material portion of our business that may be subject to renegotiation of profits or termination of contracts or subcontracts at the U.S. government's election.
Government Regulation
Due to the international scope of our operations, we are subject to complex U.S. and foreign laws governing, among others, anti-corruption matters, export controls, economic sanctions, anti-boycott rules, currency exchange controls and transfer pricing rules. These laws are administered by, among others, the U.S. Department of Justice, the SEC, the Internal Revenue Service, or the "IRS," Customs and Border Protection, the Bureau of Industry and Security, or "BIS," the Office of Antiboycott Compliance, or "OAC," and the Office of Foreign Assets Control, or "OFAC," as well as the counterparts of these agencies in foreign countries. Our policies mandate compliance with all applicable laws and regulations, including the recent economic sanctions. Despite our training and compliance programs, no assurances can be made that we will be found to be operating in full compliance with, or be able to detect every violation of, any such laws. We cannot predict the nature, scope or effect of future regulatory requirements to which our international operations might be subject or the manner in which existing laws might be administered or interpreted.
In addition, our operations and properties are subject to a variety of federal, state, local and foreign environmental laws and regulations, including those governing the discharge of pollutants into the air or water, the management and disposal of hazardous substances or wastes, the cleanup of contaminated sites, the emission of greenhouse gases, and workplace health and safety. Certain environmental laws, including the Comprehensive Environmental Response, Compensation, and Liability Act, impose joint and several liability for cleanup costs, without regard to fault, on persons who have disposed of or released hazardous substances into the environment. In addition, we could become liable to third parties for damages resulting from the disposal or release of hazardous substances into the environment. Some of our sites are affected by soil and groundwater contamination relating to historical site operations, which could require us to incur expenses to investigate and remediate the contamination in compliance with environmental laws. Some of our operations require environmental permits and controls to prevent and reduce air and water pollution, and these permits are subject to modification, renewal and revocation by issuing authorities. A failure to obtain, maintain, and comply with these permit requirements could result in substantial penalties, including facility shutdowns. From time to time, we could be subject to requests for information, notices of violation, and/or investigations initiated by environmental regulatory agencies relating to our operations and properties. Violations of environmental and health and safety laws can result in substantial penalties, civil and criminal sanctions, permit revocations, and facility shutdowns. Environmental and health and safety laws may change rapidly and have tended to become more stringent over time. As a result, we could incur costs for past, present, or future failure to comply with all environmental and health and safety laws and regulations. In addition, we could become subject to potential regulations concerning the emission of greenhouse gases or the disclosure thereof, and while the effect of such future regulations cannot be determined at this time, they could require us to incur substantial costs in order to achieve and maintain compliance. In the ordinary course of business, we may be held responsible for any environmental damages we may cause to our customers' premises.
Other than our compliance requirements with environmental regulations, compliance with other government regulations has not had, and based on laws and regulations currently in effect, is not expected to have a material effect on the Company's capital expenditures, earnings or competitive position. See the section titled Item 1A, "Risk Factors" for additional information on government regulation that could impact our business.
Seasonality
Demand for our products depends in large part upon the level of capital and maintenance expenditures by many of our customers and end-users, in particular those customers in the oil, gas, refining, chemical processing and transportation markets. These customers' expenditures historically have been cyclical in nature and vulnerable to economic downturns. In addition,
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quarterly revenues for the heat tracing business are impacted by the significance and timing of large projects that may occur at any given time.
Our quarterly operating results may fluctuate based on the cyclical pattern of industries to which we provide heat tracing solutions and the seasonality of demand for our heat tracing products. Most of our heat tracing customers perform preventative maintenance prior to the winter season, typically making our second and third fiscal quarters the largest for related revenue. However, revenues from projects are not seasonal and depend on the capital spending environment and project timing. Our operating expenses remain relatively consistent with some variability, primarily related to sales commissions and related compensation as well as investments to further our global strategy of diversification, digitization, and decarbonization.
Our revenue derived from industrial process heating products typically experiences greater seasonality than our legacy heat tracing business, with a noticeable increase in revenue and profitability typically beginning in the third fiscal quarter and continuing during the winter months through the end of the fourth fiscal quarter.
Human Capital Management
We believe that our people are one of our most important investments and greatest assets. The success and growth of our business depend on our ability to attract, develop, incentivize and retain a diverse population of talented, qualified and highly skilled employees at all levels of our organization, including our executive officers, and across our global workforce. Our culture enables us to achieve our vision to be the world leader in industrial process heating. At the heart of our culture are our core values of Care, Commit and Collaborate.
Our board of directors provides important oversight on certain human capital matters through its Human Capital Management and Compensation Committee (the "HCMC Committee"). The HCMC Committee maintains oversight over our strategic direction for various people-related business strategies, including our compensation and benefit programs, leadership succession planning, culture, diversity, and talent development programs. The Company’s management proactively manages our human capital and cares for our employees in a manner that is consistent with our values.
Employee Health and Safety
We believe nothing is more important than the health, safety, and well-being of our people. We work hard to achieve best-in-class levels of safety through the application of policies and best practices. We maintain a robust safety culture to reduce workplace injuries, supported by effective communication, reporting, and external benchmarking. We hold regular talks and events on key safety topics, including reporting all injuries, hazards, near-misses, and case management to prevent recurrence. We also participate in industry groups, within and outside the manufacturing, construction, and energy sectors, to share safety best practices and collaborate to address safety concerns.
Our Safety Record
Any loss of life or serious injury in the workplace is unacceptable. We did not have any fatal incidents at any of our facilities or job sites in fiscal 2026. We primarily track two key safety indicators in monitoring our safety efforts, total recordable incident rate (“TRIR”) and lost-time incident rate (“LTIR”). Our TRIR decreased from 0.2 to 0.16 in fiscal 2026, and our LTIR remained at 0.0 in both fiscal 2026 and 2025. TRIR and LTIR are calculated as the Company’s number of recordable injuries/lost time, respectively, experienced by employees during the fiscal year multiplied by 200,000 divided by the number of man hours worked during the fiscal year.
In addition to TRIR and LTIR, we also measure total near miss and hazard ID reporting as well as case management metrics. These aid in accident prevention, which we believe is critical to incident avoidance and supports our superior safety rating in the industry.
Workforce Breakdown
At March 31, 2026, we employed 1,792 employees, of which 49.4% were located in the US-LAM region, 29.1% in Canada, 10.7% located in EMEA, and 10.8% located in APAC. We also contracted with 281 contingent workers at March 31, 2026. Our 12-month rolling voluntary turnover rate as of March 31, 2026, was 10.5% compared to the 2025 U.S. manufacturing industry average of 16.4% according to the U.S. Bureau of Labor Statistics ("BLS") Job Openings and Labor Turnover Survey (March 2025 to February 2026). Our fiscal year differs from the period covered by the BLS study, but we believe it is the best proxy to benchmark against. Approximately 4.5% of our global employees are covered by a collective bargaining agreement. We have not experienced any union-related work stoppages in the past, and we believe that our working relationship with our employees is positive.
Diversity
We believe in the benefits of an inclusive workforce, where diverse backgrounds are represented, engaged, and empowered to inspire innovative ideas and decisions. We have locations in 14 countries, and our employees operate across cultures, functions, unique languages, and time zones to solve the technical and logistical challenges presented by a worldwide
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customer base. Our diversity statistics include the following as of March 31, 2026 (based on self-reporting at the date of hire): 21.6% of our employees worldwide identify as female; 21.5% of our employees in the U.S. identify as female, and 49.3% of our employees in the U.S. identify as a racial or ethnic minority.
Talent Development
The Company supports and invests in talent development and provides continuing education opportunities and professional development for our employees. We use a robust performance management by objective process that identifies goals and reinforces the Company's values through an evaluation process twice per year. Furthermore, the ‘Level Up’ job structure for direct labor employees yielded a number of promotions which is key to the upskilling of our workforce and aided in the retention of our workforce.
We are focused on our culture, which is anchored in our core values and purpose. Our values are embedded in everything we do, including safety, hiring and promoting, goal setting, decision making and performance reviews. This is why we have invested in our culture program called the Thermon CORE, which is a multi-year program that aligns our global management base to our key results, continuous improvement mindset, and deep financial, strategy and business acumen through business simulation engagement.
Compensation and Benefits
We provide competitive compensation and benefits programs to help meet the needs of our employees and to attract and retain talent. In addition to salaries, all regular full and part-time employees globally have an opportunity to earn an annual short-term incentive. Benefits vary by country and region, but our U.S. and Canadian employees have a retirement plan, healthcare and insurance benefits, health savings and flexible spending accounts, paid time off, flexible work schedules (where appropriate), employee assistance programs, tuition assistance, and scholarship programs for children and grandchildren of employees.
In addition to our broad-based programs, we use targeted equity-based grants with vesting conditions to facilitate retention of key personnel, particularly those with critical domain expertise necessary to deliver on the long-term strategic initiatives of the Company. We continue to expand our impact with employee equity through enhanced market-aligned annual awards, as well as consideration of strategic roles to add to the annual program.
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ITEM 1A. Risk Factors
The following risk factors address the material risks concerning our business. If any of the risks discussed in this annual report were to occur, our business, prospects, financial condition, results of operations and our ability to service our debt could be materially and adversely affected and the trading price of our common stock could decline significantly. Some statements in this annual report, including statements in the following risk factors, constitute forward-looking statements. Please refer to the section entitled "Forward-Looking Statements."
Risks Relating to the Pending Merger with CECO Environmental
The completion of the Merger is subject to the satisfaction or waiver of various closing conditions, and there can be no assurances as to whether and when the Merger will be completed.
The completion of the Merger is subject to the satisfaction or waiver of a number of conditions, including, among others, the approval of the stock issuance by the CECO stockholders, the adoption of the Merger Agreement by the Thermon stockholders, the listing of shares of CECO common stock to be issued in the Merger on the Nasdaq, the receipt by Thermon of a tax opinion regarding the qualification of the Merger as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended; the appointment of the new board designees to the CECO board, and the absence of any law or order prohibiting the Merger. There can be no assurance that all required conditions will be satisfied or waived, or that the Merger will be completed on the expected terms or schedule, or at all. If the Merger is not completed for any reason, including as a result of the failure of CECO stockholders to approve the stock issuance or the failure of Thermon stockholders to adopt the Merger Agreement, the ongoing businesses of CECO and Thermon may be materially adversely affected, and CECO and Thermon would be subject to a number of risks, including: each company may experience negative reactions from the financial markets, including negative impacts on their respective stock prices; each company may experience negative reactions from their respective customers, suppliers, employees and other business partners; CECO and Thermon will still be required to pay certain significant costs relating to the Merger, such as legal, accounting, consulting, financial advisory and printing fees, regardless of whether the Merger is completed; under certain circumstances, CECO may be required to pay Thermon a termination fee of $105.0 million, or Thermon may be required to pay CECO a termination fee of $74.7 million; and matters relating to the Merger require substantial commitments of time and resources by each company’s management, which could otherwise be devoted to day-to-day operations and other business opportunities.
CECO and Thermon will incur significant direct and indirect costs as a result of the Merger, regardless of whether the Merger is completed.
CECO and Thermon have incurred, and expect to continue to incur, significant costs, expenses and fees for professional services and other transaction costs in connection with the Merger. Many of these costs will be borne by CECO or Thermon even if the Merger is not completed. In addition, the Merger Agreement provides that certain expenses incurred in connection with the filing, printing and mailing of the joint proxy statement/prospectus and the registration statement on Form S-4, and all filing and other fees paid to the SEC in connection with the Merger (other than attorneys’ fees, accountants’ fees and related expenses), will be shared equally by CECO and Thermon.
CECO and Thermon may be subject to litigation related to the Merger, which could result in substantial costs and prevent or delay the completion of the Merger.
It is common for public companies to be targeted by securities class action and derivative lawsuits following the announcement of a Merger. CECO and Thermon may become involved in this type of litigation in connection with the Merger. Such lawsuits could seek, among other things, injunctive relief or other equitable relief, including a request to rescind parts of the Merger Agreement already implemented or to otherwise enjoin the parties from consummating the Merger. Defending such claims could result in substantial costs and divert management time and resources.
Because the market price of CECO common stock will fluctuate, Thermon stockholders cannot be sure of the exact value of the stock consideration or mixed consideration they will receive.
The stock consideration and the stock portion of the mixed consideration are fixed at an exchange ratio of 0.8110 and 0.6840 shares of CECO common stock, respectively, per share of Thermon common stock. These ratios will not be adjusted to reflect changes in the market price of CECO common stock prior to the closing of the Merger. Consequently, the implied value of the stock consideration and mixed consideration will fluctuate as the market price of CECO common stock fluctuates. In contrast, the cash consideration is fixed at $63.89 per share. A decline in the market price of CECO common stock could result in the stock consideration or mixed consideration having a significantly lower value than the cash consideration at the time of closing. The Merger Agreement does not provide CECO or Thermon with a termination right or other similar protection relating to the market price of CECO common stock.
Risks Related to Our Business and Industry
Macroeconomic and Industry Risks
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Suspensions and delays in large capital projects, especially in the United States and Canada, have adversely affected our results of operations in recent years. Continued significant volatility in these capital projects could further decrease demand for some of our products and services and adversely affect our business, financial condition and results of operations.
A significant portion of our revenue historically has been generated by end-users in connection with the development of large capital projects. The businesses of most of our large capital project customers are, to varying degrees, cyclical and historically have experienced periodic downturns. Profitability in the development of large capital projects is highly sensitive to supply and demand cycles and commodity prices, which historically have been volatile, and our customers in this industry have tended to delay large capital projects, including expensive maintenance and upgrades, during industry downturns. The demand for large capital projects may be further constrained by the uncertainty caused by the recent changes in United States trade policy. Customer project delays and cancellations may limit our ability to realize value from our backlog as expected and cause fluctuations in the timing or the amount of revenue earned and the profitability of our business in a particular period. In addition, such delays and cancellations may lead to significant fluctuations in results of operations from quarter to quarter, making it difficult to predict our financial performance on a quarterly basis.
Demand for a significant portion of our products and services in connection with large capital projects depends upon the level of capital expenditure by companies in the energy industry, which depends, in part, on energy prices, which can be volatile. In recent years, we have experienced suspensions or delays in large capital projects within the energy sector, especially in the upstream exploration and production sector, and most notably in the U.S. and Canada. The impact on oil and gas commodity markets has further been impacted by the heightened level of global instability. A sustained downturn in the capital expenditures of our customers, whether due to the significant volatility in the market price of oil and gas or demand for oil and gas products, may delay projects, decrease demand for our products and services, which, in turn, could have an adverse effect on our business, financial condition and results of operations. Such volatility, including the perception that it might continue, could also have a significant negative impact on the market price of our common stock.
As a global business, we are exposed to economic, political and other risks in a number of countries, which could materially reduce our revenues, profitability, cash flows, or materially increase our liabilities. If we are unable to continue operating successfully in one or more foreign countries, it may have an adverse effect on our business and financial condition.
For fiscal 2026, approximately 51% of our revenues were generated outside of the U.S., and approximately 20% of our revenues were generated outside of North America. One of our key growth strategies is to continue to expand our global footprint in emerging and high growth markets around the world; however, we may be unsuccessful in expanding our international business.
Conducting business outside the U.S. subjects us to additional risks that may impact our revenues, profitability or cash flows or increase our liabilities, including the following:
•changes in a specific country's or region's political, social or economic conditions, particularly in emerging markets;
•changes in trade relations between the U.S., Canada, China or Europe and foreign countries in which our customers and suppliers operate, including protectionist measures such as tariffs, import or export licensing requirements and trade sanctions;
•restrictions on our ability to own or operate subsidiaries in, expand in and, if necessary, repatriate cash from, foreign jurisdictions;
•exchange controls and currency restrictions;
•the burden of complying with numerous and potentially conflicting legal requirements;
•potentially negative consequences from changes in U.S. and foreign tax laws;
•difficulty in staffing and managing (including ensuring compliance with internal policies and controls) geographically widespread operations;
•different regulatory regimes controlling the protection of our intellectual property;
•difficulty in the enforcement of contractual obligations in non-U.S. jurisdictions and the collection of accounts receivable from foreign accounts; and
•transportation delays or interruptions, including those caused by the escalation of conflicts in the Middle East.
One or more of these factors could prevent us from successfully expanding our presence in international markets, could have an adverse effect on our revenues, profitability or cash flows or cause an increase in our liabilities. We may not succeed in developing and implementing policies and strategies to counter the foregoing factors effectively in each location where we do business. In addition, the imposition of trade restrictions, economic sanctions or embargoes by the U.S. or foreign governments could adversely affect our future sales and results of operations.
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Uncertainty over and changes in government administrative policy, including changes to existing trade agreements and government sanctions, including the recently enacted tariffs on trade between the U.S. and other countries, could have a material adverse effect on our business, results of operations and financial condition.
As a result of changes to government administrative policy, there may be changes to existing trade agreements, greater restrictions on free trade generally, significant increases in tariffs on goods imported into the U.S., Canada or the European Union, particularly tariffs on products manufactured in China, Canada, and Mexico, among other possible changes. Changes in social, political, regulatory and economic conditions or in laws and policies governing foreign trade, manufacturing, development and investment in the territories and countries where we currently manufacture and sell products, and any resulting negative sentiments towards U.S. companies as a result of such changes, could have an adverse effect on our business, financial condition, results of operations and cash flows. Trade restrictions, including withdrawal from or modification of existing trade agreements, negotiation of new trade agreements and imposition of new (and retaliatory) tariffs, including any tariffs proposed by the current U.S. administration, against certain countries or covering certain products, could increase our costs and impair our ability to expand the business. Based on our manufacturing practices and locations, there can be no assurance that any future executive or legislative action in the U.S. or other countries relating to trade regulation would not adversely affect our business, operations and financial results.
The markets we serve are subject to general economic conditions and cyclical demand, which could harm our business and lead to significant shifts in our results of operations from quarter to quarter that make it difficult to project long-term performance.
Our operating results have been and may in the future be adversely affected by general economic conditions and the cyclical pattern of certain industries in which our customers and end-users operate. Demand for our products and services depends in large part upon the level of capital and maintenance expenditures by many of our customers and end-users, in particular those in the energy, chemical processing and power generation industries, and firms that design and construct facilities for these industries. These customers' expenditures historically have been cyclical in nature and vulnerable to economic downturns. In addition, these customers' expenditures may be further constrained by the uncertainty caused by the recent changes in United States trade policy. Prolonged periods of little or no economic growth could result in lower demand for our products and a negative impact on our results of operations and cash flows. In addition, this historically cyclical demand may lead to significant shifts in our results of operations from quarter to quarter, which limits our ability to make accurate long-term predictions about our future performance.
Business Risks
If we are unable to successfully develop and improve our products and successfully implement new technologies in the markets that we serve and develop solutions for diversified new markets, our business and results of operations could be adversely affected.
Our future success will depend upon our continued investment in research and development of new products, improvement and enhancement of our existing product offerings and our ability to continue to achieve new technological advances in the process heating industry. Our inability to continue to successfully develop and market new products or our inability to implement technological advances on a pace consistent with that of our competitors could adversely affect our business and results of operations.
We may be unable to compete successfully in the highly competitive markets in which we operate.
We operate in domestic and international markets and compete with highly competitive domestic and international manufacturers and service providers. The fragmented nature of the process heating industry and the similarly fragmented nature of the industrial process heating industry makes the market for our products and services highly competitive. A number of our direct and indirect competitors are major multinational corporations, some of which have substantially greater technical, financial and marketing resources, and additional competitors may enter these markets at any time. In addition, we compete against many regional and lower-cost manufacturers. Our competitors may develop products that are superior to our products, develop methods of more efficiently and effectively providing products and services, adapt more quickly than we do to new technologies or evolving customer requirements, or attempt to compete based primarily on price, localized expertise and local relationships. If we are unable to continue to differentiate our products and services or if we experience an increase in competition, it may cause us to lose market share or compel us to reduce prices to remain competitive, which could result in a reduction in our revenues and results of operations.
Our backlog may fluctuate and a failure to deliver our backlog on time could affect our future sales, profitability and our relationships with our customers, and if we were to experience a material amount of modifications or cancellations of orders, our sales could be negatively impacted.
Our backlog is comprised of the portion of firm signed purchase orders or other written contractual commitments received from customers that we have not recognized as revenue. Backlog may increase or decrease based on the addition of
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large multi-year projects and their subsequent completion. Backlog may also be favorably or unfavorably affected by foreign currency rate fluctuations. The dollar amount of backlog as of March 31, 2026, was $254.9 million. The timing of our recognition of revenue out of our backlog is subject to a variety of factors that may cause delays, many of which, including fluctuations in our customers' delivery schedules, are beyond our control and difficult to forecast. Such delays may lead to significant fluctuations in results of operations from quarter to quarter, making it difficult to predict our financial performance on a quarterly basis. Further, while we have historically experienced few order cancellations and the amount of order cancellations has not been material compared to our total contract volume, if we were to experience a significant amount of cancellations of or reductions in purchase orders, it would reduce our backlog and, consequently, our future sales and results of operations.
Our ability to meet customer delivery schedules for our backlog is dependent on a number of factors including, but not limited to, access to raw materials, an adequate and capable workforce, engineering expertise for certain projects, sufficient manufacturing capacity and, in some cases, our reliance on subcontractors. The availability of these factors may in some cases be subject to conditions outside of our control. A failure to deliver in accordance with our performance obligations may result in financial penalties and damage to existing customer relationships, our reputation and a loss of future bidding opportunities, which could cause the loss of future business and could negatively impact our future sales and results of operations.
Our future revenue depends in part on our ability to bid and win new contracts. Our failure to effectively obtain future contracts could adversely affect our profitability.
Our future revenue and overall results of operations require us to successfully bid on new contracts and, in particular, contracts for large projects, which are frequently subject to competitive bidding processes. Our revenue from major projects depends in part on the level of capital expenditures in our principal end markets, including the general industrial, chemical and petrochemical, oil, gas, power generation, commercial, food and beverage, rail and transit, and other industries. If we fail to replace completed or canceled large projects with new order volume of the same magnitude, our backlog will decrease and our future revenue and financial results may be adversely affected. The number of such projects we win in any year fluctuates, and is dependent upon the number of projects available and our ability to bid successfully for such projects. Contract proposals and negotiations are complex and frequently involve a lengthy bidding and selection process, which is affected by a number of factors, such as competitive position, market conditions, financing arrangements and required governmental approvals. For example, a client may require us to provide a bond or letter of credit to protect the client should we fail to perform under the terms of the contract. If we fail to secure adequate financial arrangements or required governmental approvals, we may not be able to pursue particular projects, which could adversely affect our profitability.
Our current or future indebtedness could impair our financial condition and reduce the funds available to us for other purposes. Our debt agreements impose certain operating and financial restrictions, with which failure to comply could result in an event of default that could adversely affect our results of operations.
At March 31, 2026, we had $141.1 million of outstanding indebtedness. If our cash flows and capital resources are insufficient to fund the interest payments on our outstanding borrowings under our credit facility and other debt service obligations and keep us in compliance with the covenants under our debt agreements or to fund our other liquidity needs, we may be forced to reduce or delay capital expenditures, sell assets or operations, seek additional capital or restructure or refinance our indebtedness. We cannot guarantee that we would be able to (i) take any of these actions or that these actions would permit us to meet our scheduled debt service obligations or that these actions would be permitted under the terms of our existing or future debt agreements, which may impose significant operating and financial restrictions on us and could adversely affect our ability to finance our future operations or capital needs; (ii) obtain standby letters of credit, bank guarantees or performance bonds required to bid on or secure certain customer contracts; (iii) make strategic acquisitions or investments or enter into alliances; (iv) withstand a future downturn in our business or the economy in general; (v) engage in business activities, including future opportunities, that may be in our interest; and (vi) plan for or react to market conditions or otherwise execute our business strategies.
If we cannot make scheduled payments on our debt, or if we breach any of the covenants in our debt agreements, we will be in default under such agreements and, as a result, our debt holders could declare all outstanding principal and interest to be due and payable, the lenders under our credit facility could terminate their commitments to lend us money and foreclose against the assets securing our borrowings, and we could be forced into bankruptcy or liquidation.
In addition, we and certain of our subsidiaries may incur significant additional indebtedness, including additional secured indebtedness. Although the terms of our debt agreements contain restrictions on the incurrence of additional indebtedness, these restrictions are subject to a number of qualifications and exceptions, and additional indebtedness incurred in compliance with these restrictions could be significant. Incurring additional indebtedness could increase the risks associated with our substantial indebtedness, which may impact our ability to meet our debt service obligations.
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Our gross margins depend, in part, on our revenue mix. Although large project revenues, which provide for an ongoing stream of future high-margin revenues, are critical to our success and growth, increased large project revenues can adversely affect our gross margin.
Typically, both large project and maintenance customers require our products as well as our engineering and construction services. We tend to experience lower margins from our design optimization, engineering, installation and maintenance services than we do from sales of our heating cable, tubing bundle and control system products. We also tend to experience lower margins from our outsourced products, such as electrical switch gears and transformers, than we do from our manufactured products. Accordingly, our gross margins are impacted by our mix of products and services. Although our product mix varies from period to period due to a variety of factors, during fiscal year ended March 31, 2026, revenue recognized over time accounted for approximately 30% of our total revenue. Although over time revenues, which provide for an ongoing stream of future high-margin maintenance revenues, are critical to our long-term success and growth, a revenue mix higher in lower-margin over time revenues relative to historical levels could adversely affect our gross margins and results of operations.
Our business strategy includes growth and product diversification through strategic acquisitions. These acquisitions and investments could be unsuccessful or consume significant resources, which could adversely affect our results of operations.
Acquisitions and investments may involve cash expenditures, debt incurrence, operating losses and expenses that could have an adverse effect on our financial condition and results of operations. Acquisitions involve numerous other risks, including:
•diversion of management time and attention from daily operations;
•difficulties integrating acquired businesses, technologies and personnel into our business;
•difficulties in realization of expected synergies and revenue creation or cross-selling opportunities;
•potential loss of key employees, key contractual relationships or key customers of acquired companies or of us; and
•assumption of the liabilities and exposure to unforeseen liabilities of acquired companies.
We have limited experience in acquiring or integrating other businesses or making investments or undertaking joint ventures with others. It may be difficult for us to complete transactions quickly and to integrate acquired operations efficiently into our current business operations. It may also be difficult for us to identify suitable acquisition candidates, which may inhibit our growth rate. Any acquisitions or investments may ultimately harm our business or financial condition if they are unsuccessful and any acquisitions or investments ultimately result in impairment charges.
We carry insurance against many potential liabilities, but our management of risk may leave us exposed to unidentified or unanticipated risks.
Although we maintain insurance policies with respect to our related exposures, including certain casualty, property and business interruption programs, these policies contain deductibles, self-insured retentions and limits of coverage. In addition, we may not be able to continue to obtain insurance at commercially reasonable rates or may be faced with liabilities not covered by insurance, such as, but not limited to, environmental contamination, conflicts, or terrorist attacks. We estimate our liabilities for known claims and unpaid claims and expenses based on information available as well as projections for claims incurred but not reported. However, insurance liabilities, some of which are self-insured, are difficult to estimate due to various factors. If any of our insurance policies or programs are not effective in mitigating our risks, we may incur losses that are not covered by our insurance policies, that are subject to deductibles or that exceed our estimated accruals or our insurance policy limits, which could adversely impact our business and results of operations.
Volatility in currency exchange rates may adversely affect our financial condition, results of operations or cash flows.
We may not be able to effectively manage our exchange rate and/or currency transaction risks. Volatility in currency exchange rates may decrease our revenue and profitability, adversely affect our liquidity and impair our financial condition. While we have entered into hedging instruments to manage our exchange rate risk as it relates to certain intercompany balances with certain of our foreign subsidiaries, these hedging activities do not eliminate exchange rate risk, nor do they reduce risk associated with total foreign sales. In addition, we may not be able to obtain hedging instruments with respect to certain currencies.
Our non-U.S. subsidiaries generally sell their products and services in the local currency, but obtain a significant amount of their products from our facilities located elsewhere, primarily the U.S., Canada or Europe. In particular, significant fluctuations in the Canadian Dollar, the Euro or the Pound Sterling against the U.S. Dollar could adversely affect our results of operations. During fiscal 2026, the value of the U.S. Dollar overall weakened in relation to the principal non-U.S. currencies from which we derive revenue, which positively impacted revenue by $6.1 million. During fiscal 2025, the value of the U.S. Dollar overall strengthened in relation to the principal non-U.S. currencies from which we derive revenue, which negatively
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impacted revenue by $1.0 million. Any further appreciation in the U.S. Dollar relative to such non-U.S. currencies could continue to have a significant negative impact on our results of operations in future periods. We also bid for certain foreign projects in U.S. Dollars or Euros. If the U.S. Dollar or Euro strengthen relative to the value of the local currency, we may be less competitive in bidding for those projects. In addition, currency variations can adversely affect margins on sales of our products in countries outside of the U.S. and margins on sales of products that include components obtained from suppliers located outside of the U.S. See Item 7A, "Quantitative and Qualitative Disclosures about Market Risk" for additional information regarding our foreign currency exposure relating to operations.
Because our consolidated financial results are reported in U.S. Dollars and we generate a substantial amount of our sales and earnings in other currencies, the translation of those results into U.S. Dollars can result in a significant decrease in the amount of those sales and earnings. Fluctuations in currencies relative to the U.S. Dollar may make it more difficult to perform period-to-period comparisons of our reported results of operations. In addition, the net asset values of foreign operations are adjusted upward and downward based on currency exchange rate fluctuations and are reported in our foreign currency translation adjustment as part of other comprehensive income in our consolidated statements of operations and comprehensive income.
Additional liabilities related to taxes, potential tax adjustments or changes to tax policy in foreign jurisdictions could adversely impact our financial results, financial condition and cash flows.
We are subject to tax and related obligations in the jurisdictions in which we operate or do business, including state, local, federal and foreign taxes. The taxing laws of the various jurisdictions in which we operate or do business often are complex and subject to varying interpretations. Tax authorities may challenge tax positions that we take or historically have taken, and may assess taxes where we have not made tax filings or may audit the tax filings we have made and assess additional taxes, as they have done from time to time. Some of these assessments may be substantial, and may involve the imposition of substantial penalties and interest. The resolutions of our tax positions are unpredictable. The payment of substantial additional taxes, penalties or interest resulting from any assessments could adversely impact our results of operations, financial condition and cash flows.
We have significant goodwill and other intangible assets and future impairment of our goodwill and other intangible assets could have a material negative impact on our financial results.
We test goodwill and indefinite-life intangible assets for impairment on an annual basis, and more frequently if circumstances warrant, by comparing the estimated fair value of each of our reporting units to their respective carrying values. As of March 31, 2026, our goodwill and other intangible assets balance was $372.7 million, which represented 45% of our total assets. Long-term declines in projected future cash flows could result in future goodwill and other intangible asset impairments. Because of the significance of our goodwill and other intangible assets, any future impairment of these assets could have a material adverse effect on our financial results.
If we lose our senior management or other key employees or cannot successfully execute succession plans, our business may be adversely affected.
Competition for qualified management and key technical and sales personnel in our industry is intense. Our ability to successfully operate and grow our global business and implement our strategies is largely dependent on the efforts, abilities and services of our senior management and other key employees. If we lose the services of our senior management or other key employees for any reason and are unable to timely find and secure qualified replacements with comparable experience in the industry, our business could be negatively affected.
We rely heavily on trade secrets to gain a competitive advantage in the market and the unenforceability of our nondisclosure agreements may adversely affect our operations.
The process heating industry is highly competitive and subject to the introduction of innovative techniques and services using new technologies. We rely significantly on maintaining the confidentiality of our trade secrets and other information related to our operations. Accordingly, we require all employees to sign a nondisclosure agreement to protect our trade secrets, business strategy and other proprietary information. If the provisions of these agreements are found unenforceable in any jurisdiction in which we operate, the disclosure of our proprietary information may place us at a competitive disadvantage. Even where the provisions are enforceable, the confidentiality clauses may not provide adequate protection of our trade secrets and proprietary information in every such jurisdiction and our trade secrets and proprietary information could be compromised as a result.
Intellectual property challenges may hinder our ability to develop, engineer and market our products, and we may incur significant costs in our efforts to successfully avoid, manage, defend and litigate intellectual property matters.
Patents, non-compete agreements, proprietary technologies, trade secrets, customer relationships, trademarks, trade names and brand names are important to our business. Intellectual property protection, however, may not preclude competitors
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from developing products similar to ours or from challenging our trade names or products. Our pending patent applications and our pending copyright and trademark registration applications may not be allowed or competitors may challenge the validity or scope of our patents, copyrights or trademarks. In addition, our patents, copyrights, trademarks and other intellectual property rights may not provide us a significant competitive advantage, particularly in those countries where the laws do not protect our intellectual property rights as fully as in the U.S. Participants in our markets may use challenges to intellectual property as a means to compete. Patent and trademark challenges increase our costs to develop, engineer and market our products. We may need to spend significant resources monitoring our intellectual property rights and we may or may not be able to detect infringement by third parties. If we fail to successfully enforce our intellectual property rights or register new patents, our competitive position could suffer, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.
In addition, any dispute or litigation involving intellectual property could be costly and time-consuming due to the complexity and the uncertainty of intellectual property litigation. Our intellectual property portfolio may not be useful in asserting a counterclaim, or negotiating a license, in response to a claim of infringement or misappropriation. In addition, as a result of such claims, we may lose our rights to utilize critical technology, may be required to pay substantial damages or license fees with respect to the infringed rights or may be required to redesign our products at a substantial cost, any of which could have a material adverse effect on our business, financial condition, results of operations and cash flows.
Operational Risks
Breaches of our information technology systems could occur that materially damage business partner and customer relations and subject us to significant reputational, financial, legal and operational consequences.
As a company we store company, customer, employee and business partner information, which may include, among other information, trade secrets, names, addresses, phone numbers, email addresses, tax identification numbers, payment account information and customer facility information. We could be subject to sophisticated and targeted attacks attempting to obtain unauthorized access to confidential information, destroy data, disrupt or degrade service, sabotage systems or cause other damage, including via the introduction of computer viruses or malware and cyber-attacks. These attacks are constantly evolving in nature, increasing the efforts and controls required to prevent, detect and defend against them. We require user names and passwords as well as multi-factor authentication ("MFA") in order to access our information technology systems. These security measures are subject to potential third-party security breaches, employee error, malfeasance and faulty password management, among other limitations. Third parties may attempt to fraudulently induce employees or customers into disclosing user names, passwords or other sensitive information, which may in turn be used to access our information technology systems. We may not be able to anticipate, detect or recognize threats to our system or to implement effective preventive measures against all security breaches. If we were to experience a breach of our systems and were unable to protect sensitive data, such a breach could, among other things:
•risk exposing our confidential manufacturing processes and other trade secret information that may lead to new and increased entrants and competitors in our business or cause other damage to the business;
•expose our customers' facilities and projects to increased safety and security risk;
•materially damage business partner and customer relationships;
•impact our reputation in the markets in which we compete for business;
•adversely impact our financial results and expose us to potential risk of loss or litigation; and/or
•require us to incur substantial costs or require us to change our business practices.
A material disruption at any of our manufacturing facilities could adversely affect our financial performance and results of operations.
If operations at any of our manufacturing facilities were to be disrupted as a result of significant equipment failures, natural disasters, pandemics, power outages, fires, explosions, terrorism, adverse weather conditions, labor disputes or other reasons, we may be unable to fill customer orders and meet customer demand for our products, which could adversely affect our financial performance and results of operations. For example, our marketing and research & development buildings, located on the same campus as our former corporate headquarters and primary manufacturing facility in San Marcos, Texas, were destroyed by a tornado in January 2007. In addition, during fiscal 2021 and 2022, precautionary measures instituted by government authorities in certain markets and sanitization procedures adopted to protect our employees in response to the COVID-19 pandemic required us to temporarily suspend operations at certain of our manufacturing facilities.
Interruptions in production, in particular at our manufacturing facilities in the U.S. or Canada, at which we manufacture the majority of our products, could increase our costs and reduce our sales. Any interruption in production capability could require us to make substantial capital expenditures to fill customer orders, which could negatively affect our
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profitability and financial condition. We maintain property damage insurance that we believe to be adequate to provide for reconstruction of facilities and equipment, as well as business interruption insurance to mitigate losses resulting from any production interruption or shutdown caused by an insured loss. However, any recovery under our insurance policies may not offset the lost sales or increased costs that may be experienced during the disruption of operations, which could adversely affect our financial performance and results of operations.
Our dependence on subcontractors and third-party suppliers could adversely affect our results of operations.
We often rely on third-party subcontractors, suppliers and manufacturers to produce our products and complete our projects. To the extent we cannot engage subcontractors or acquire supplies or raw materials from third parties, our ability to produce our products or complete our projects in a timely fashion or at a profit may be impaired. If the amount we are required to pay for these goods and services exceeds the amount we have estimated in bidding for fixed-price contracts, we could experience losses on these contracts. Rapid price increases caused by changes in U.S. or international trade policy or tariffs may limit our ability to accurately estimate costs for our fixed-price contract bids. In addition, if a subcontractor or supplier is unable to deliver its services or materials according to the negotiated contract terms for any reason, including the deterioration of its financial condition or over-commitment of its resources, we may be required to purchase the services or materials from another source at a higher price or, if unavailable, limit the availability of products critical to our operations. Such shortages or disruptions could be caused by factors beyond the control of our subcontractors, our suppliers or us, including inclement weather, natural disasters, conflicts, tariffs, increased demand, problems in production or distribution, disruptions in third party logistics or transportation systems or the inability of our subcontractors or suppliers to obtain credit. These factors could be exacerbated by the impact of geopolitical instability, trade policy changes or pandemics. This may reduce the profit we realize or result in a loss on a project for which the services or materials were needed or, if the product is unavailable, prevent us from accepting orders.
We may lose money on fixed-price contracts, and we are exposed to liquidated damages charges and warranty claims in many of our customer contracts.
We often agree to provide products and services under fixed-price contracts, including our turnkey solutions. Under these contracts, we are typically responsible for all cost overruns, other than the amount of any cost overruns resulting from requested changes in order specifications. Our actual costs and any gross profit realized on these fixed-price contracts could vary from the estimated costs on which these contracts were originally based. This may occur for various reasons, including errors in estimates or bidding, changes in availability and cost of labor and raw materials, including those caused by tariffs, and unforeseen technical and logistical challenges, including with managing our geographically widespread operations and use of third party subcontractors, suppliers and manufacturers in many countries. These variations and the risks inherent in our projects may result in reduced profitability or losses on projects. Depending on the size of a project, variations from estimated contract performance could have a material adverse impact on our project revenue and operating results. In addition, many of our customer contracts, including fixed-price contracts, contain liquidated damages and warranty provisions for which we are responsible in the event that we fail to perform our obligations thereunder in a timely manner or our products or services fail to perform, in accordance with the agreed terms, conditions and standards.
We extend credit to customers in conjunction with our performance under fixed-price contracts which subjects us to potential credit risks.
We typically agree to allow our customers to defer payment on projects until certain milestones have been met or until the projects are substantially completed, and customers typically withhold some portion of amounts due to us as retainage. Our payment arrangements subject us to potential credit risk related to changes in business and economic factors affecting our customers, including material changes in our customers' revenues or cash flows. If we are unable to collect amounts owed to us, or retain amounts paid to us, our cash flows would be reduced, and we could experience losses if those amounts exceed current allowances. Any of these factors could adversely impact our business and results of operations.
We may not achieve some or all of the expected benefits of our operational initiatives.
In order to align our operational resources with our business strategies, operate more efficiently and control costs, we may periodically announce plans to restructure certain of our operations, such as consolidation of manufacturing facilities, transitions to cost-competitive regions and product line rationalizations. We may also undertake restructuring actions and workforce reductions. For example, we enacted certain restructuring initiatives to streamline certain operations, reduce our manufacturing footprint, and position us for more profitable growth. Refer to Item 8, Financial Statements and Supplementary Data for more discussion. Risks associated with these actions include delays in execution, additional unexpected costs, realization of fewer than estimated productivity improvements and adverse effects on employee morale. If these risks materialize, we may not realize all or any of the anticipated benefits of such restructuring plans, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.
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Unforeseen difficulties with expansions, relocations or consolidations of existing facilities could adversely affect our operations.
From time to time, we may decide to enter new markets, build or lease additional facilities, expand our existing facilities, relocate or consolidate one or more of our operations or exit a facility we may own or lease. Increased costs and production delays arising from the staffing, relocation, sublease, expansion or consolidation of our facilities could adversely affect our business and results of operations.
Legal and Regulatory Risks
Due to the nature of our business, we may be liable for damages based on product liability claims. We are also exposed to potential indemnity claims from customers for losses due to our work or if our employees are injured performing services.
We face a risk of exposure to legal claims and costs of litigation in the event that the failure, use or misuse of our products results in, or is alleged to result in, death, bodily injury, property damage or economic loss. Although we maintain quality controls and procedures, we cannot be sure that our products will be free from defects. If any of our products prove to be defective, we may be required to replace the product. In addition, we may be required to recall or redesign such products, which could result in significant unexpected costs. Some of our products contain components manufactured by third parties, which may also have defects. In addition, if we are installing our products, we may be subject to claims that our installation has caused damage or loss. Our products are often installed in our customers' or end-users' complex and capital-intensive facilities involved in inherently hazardous or dangerous industries, including energy, chemical processing and power generation, where the potential liability from risk of loss could be substantial. Although we currently maintain product liability coverage, which we believe is adequate for the continued operation of our business, we cannot be certain that this insurance coverage will continue to be available to us at a reasonable cost or, if available, will be adequate to cover any potential liabilities. With respect to components manufactured by third-party suppliers, the contractual indemnification that we seek from our third-party suppliers may be insufficient to cover claims made against us. In the event that we do not have adequate insurance or contractual indemnification, product liabilities and other claims could have a material adverse effect on our business, financial condition or results of operations.
Under our customer contracts, we often indemnify our customers from damages and losses they incur due to our work or services performed by us, as well as for losses our customers incur due to any injury or loss of life suffered by any of our employees or our subcontractors' personnel occurring on our customers' property. Substantial indemnity claims may exceed the amount of insurance we maintain and could have a material adverse effect on our reputation, business, financial condition or results of operations.
We operate in many different jurisdictions and we could be adversely affected by violations of the U.S. Foreign Corrupt Practices Act and similar foreign anti-corruption laws.
The U.S. Foreign Corrupt Practices Act (the “FCPA”) and similar foreign anti-corruption laws generally prohibit companies and their intermediaries from making improper payments or providing anything of value to influence foreign government officials for the purpose of obtaining or retaining business or obtaining an unfair advantage. Recent years have seen a substantial increase in the global enforcement of anti-corruption laws, with more frequent voluntary self-disclosures by companies, aggressive investigations and enforcement proceedings by both the DOJ and the SEC resulting in record fines and penalties, increased enforcement activity by non-U.S. regulators, and increases in criminal and civil proceedings brought against companies and individuals. Because many of our customers, sales channels and end-users are involved in infrastructure construction and energy production, they are often subject to increased scrutiny by regulators. Our internal policies mandate compliance with these anti-corruption laws. However, we operate in many parts of the world that are recognized as having governmental corruption problems to some degree and where strict compliance with anti-corruption laws may conflict with local customs and practices. Our continued operation and expansion outside the U.S., including in developing countries, could increase the risk of such violations in the future. Despite our training and compliance programs, we cannot assure you that our internal control policies and procedures always will protect us from unauthorized reckless or criminal acts committed by our employees or agents. In the event that we believe or have reason to believe that our employees or agents have or may have violated applicable anti-corruption laws, including the FCPA, we may be required to investigate or have outside counsel investigate the relevant facts and circumstances, which can be expensive and require significant time and attention from senior management. Violations of these laws may result in severe criminal or civil sanctions, which could disrupt our business and result in adverse effects on our reputation, business, results of operations or financial condition.
Our international operations and non-U.S. subsidiaries are subject to a variety of complex and continually changing laws and regulations and, in particular, export control regulations or sanctions.
Due to the international scope of our operations, we are subject to a complex system of laws and regulations, including regulations issued by the U.S. Department of Justice (the “DOJ”), the SEC, the IRS, the U.S. Department of the Treasury, the U.S. Department of State, Customs and Border Protection, Bureau of Industry and Security (“BIS”), Office of Anti Boycott
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Compliance (“OAC”) and Office of Foreign Assets Control (“OFAC”), as well as the counterparts of these agencies in foreign countries. Since the commencement of the Russo-Ukrainian war in 2022, many of these regulations have expanded significantly and become increasingly complex. While we believe we are in material compliance with these regulations and maintain programs intended to achieve compliance, we may currently or may in the future be in violation of these regulations. For example, in 2009, we entered into settlement agreements with BIS and OFAC, and in 2010, we entered into a settlement agreement with OAC, in each case with respect to matters we voluntarily disclosed to such agencies. Any alleged or actual violations of these regulations may subject us to government scrutiny, investigation and civil and criminal penalties and may limit our ability to export our products or provide services outside the U.S. Additionally, we cannot predict the nature, scope or effect of future regulatory requirements to which our international operations might be subject or the manner in which existing laws might be administered or interpreted.
In addition, our geographically widespread operations, coupled with our relatively smaller offices in many countries and our reliance on third party subcontractors, suppliers and manufacturers in the completion of our projects, make it more difficult to oversee and ensure that all our offices and employees comply with our internal policies and control procedures. We have experienced immaterial employee theft in the past, and we cannot assure you that we can ensure our employees' compliance with our internal control policies and procedures.
We are subject to numerous environmental and health and safety laws and regulations, as well as potential environmental liabilities, which may require us to make substantial expenditures.
Our operations and properties are subject to a variety of federal, state, local and foreign environmental laws and regulations, including those governing the discharge of pollutants into the air or water, the management and disposal of hazardous substances or wastes, the cleanup of contaminated sites and workplace health and safety. As an owner or operator of real property, or generator of waste, we could become subject to liability for environmental contamination, regardless of whether we caused such contamination. Certain environmental laws, including the Comprehensive Environmental Response, Compensation, and Liability Act, impose joint and several liability for cleanup costs, without regard to fault, on persons who have disposed of or released hazardous substances into the environment. In addition, we could become liable to third parties for damages resulting from the disposal or release of hazardous substances into the environment. Some of our operations require environmental permits and controls to prevent and reduce air and water pollution, and these permits are subject to modification, renewal and revocation by issuing authorities. From time to time, we could be subject to requests for information, notices of violation, and/or investigations initiated by environmental regulatory agencies relating to our operations and properties. Violations of environmental and health and safety laws can result in substantial penalties, civil and criminal sanctions, permit revocations, and facility shutdowns. Environmental and health and safety laws may change rapidly and have tended to become more stringent over time. As a result, we could incur costs for past, present, or future failure to comply with all environmental and health and safety laws and regulations. In addition, we could become subject to potential regulations concerning the use of per- or polyfluoroalkyl substances ("PFAS"), the emission of greenhouse gases or disclosure regarding such emissions, and while the effect of such future regulations cannot be determined at this time, they could require us to incur substantial costs in order to achieve and maintain compliance. For example, European Union regulatory authorities and certain other governmental authorities are contemplating regulations to restrict and phase-out PFAS. In the ordinary course of business, we may be held responsible for any environmental damages we may cause to our customers' premises.
The effects of climate change and any related regulation of greenhouse gases could have a negative impact on our business.
Governments around the world are increasingly focused on enacting laws and regulations regarding climate change and regulation of greenhouse gases. Lawmakers and regulators in the jurisdictions where we operate have proposed or enacted regulations requiring reporting of greenhouse gas emissions and the restriction thereof, including the SEC’s recent rule proposal for climate change disclosure, increased fuel efficiency standards, carbon taxes or cap and trade systems, restrictive permitting, and incentives for renewable energy. In addition, efforts have been made and continue to be made in the international community toward the adoption of international treaties or protocols that would address global climate change issues and impose reductions of hydrocarbon-based fuels, including plans developed in connection with the Paris climate conference in December 2015 and the Katowice climate conference in December 2018. Laws or regulations incentivizing or mandating the use of alternative energy sources such as wind power and solar energy have also been enacted in certain jurisdictions. Additionally, numerous large cities globally and several countries have adopted programs to mandate or incentivize the conversion from internal combustion engine powered vehicles to electric-powered vehicles and placed restrictions on non-public transportation. Such policies or other laws, regulations, treaties and international agreements related to greenhouse gases and climate change may negatively impact the price of oil relative to other energy sources, reduce demand for hydrocarbons, or otherwise unfavorably impact our customers in the oil, gas, power generation and petrochemical industries. To the extent our customers, particularly our energy and industrial customers, are subject to any of these or other similar proposed or newly enacted laws and regulations or impacted by the change in energy prices due to such laws and regulations, we are exposed to risks that the additional costs incurred by customers to comply with such laws and regulations or that the deterioration of customers’ financial results as a result of changing energy prices could impact our customers’ ability or desire to continue to
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operate at similar levels in certain jurisdictions as historically seen or as currently anticipated, which could negatively impact their demand for our products and services. These laws and regulations could also increase costs associated with our operations, including costs for raw materials and transportation and compliance with enhanced climate change-related disclosure requirements. The ultimate impact of greenhouse gas emissions-related agreements, legislation, disclosure requirements and related measures on our financial performance is highly uncertain because we are unable to predict with certainty, for a multitude of individual jurisdictions, the outcome of political decision-making processes and the variables and trade-offs that inevitably occur in connection with such processes.
In addition to potential impacts on our business resulting from climate-change legislation or regulations, our business also could be negatively affected by climate-change related physical changes or changes in weather patterns. An increase in severe weather patterns could result in damages to or loss of our manufacturing facilities, impact our ability to conduct our operations and/or result in a disruption of our customers’ operations. In addition, volatility in weather patterns could exacerbate the cyclicality of demand for our heating products.
Risks Related to Ownership of Our Common Stock
Our quarterly operating results may vary significantly, which could negatively impact the price of our common stock.
Our quarterly results of operations have fluctuated in the past and will continue to fluctuate in the future. You should not rely on the results of any past quarter or quarters as an indication of future performance in our business operations or the price of our common stock. Factors that might cause our operating results to vary from quarter to quarter include, but are not limited to:
•general economic conditions and cyclicality in the end markets we serve;
•the effects of the COVID-19 pandemic or other global pandemics, conflicts, changes in U.S. or international trade policy or catastrophes;
•future growth of energy and chemical processing capital investments;
•a material disruption at any of our manufacturing facilities;
•delays in our customers' projects for which our products are a component;
•the timing of completion of large projects;
•costs associated with regulatory compliance;
•competition from various other sources providing similar heat tracing products and services, or other alternative technologies, to customers; and
•the seasonality of demand for maintenance orders, which is typically highest during our second and third fiscal quarters.
If our results of operations from quarter to quarter fail to meet the expectations of securities analysts and investors, the price of our common stock could be negatively impacted.
The market price of our common stock may fluctuate significantly, and this may make it difficult for holders to resell our common stock when they want or at prices that they find attractive.
The price of our common stock on the New York Stock Exchange ("NYSE") constantly changes. We expect that the market price of our common stock will continue to fluctuate. The market price of our common stock may fluctuate as a result of a variety of factors, many of which are beyond our control. These factors include, but are not limited to:
•quarterly fluctuations in our operating results;
•changes in investors' and analysts' perception of the business risks and conditions of our business or our competitors;
•our ability to meet the earnings estimates and other performance expectations of financial analysts or investors;
•unfavorable commentary or downgrades of our stock by equity research analysts;
•the emergence of new sales channels in which we are unable to compete effectively;
•disruption to our operations;
•fluctuations in the stock prices of our peer companies or in stock markets in general; and
•general economic or political conditions, including the effects of global trade policies.
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In addition, in recent years, global equity markets have experienced extreme price and volume fluctuations. This volatility has had a significant effect on the market price of securities issued by many companies for reasons often unrelated to their operating performance. These broad market fluctuations may adversely affect the market price of our common stock, regardless of our operating results and cash flows.
Anti-takeover provisions contained in our charter and bylaws could impair a takeover attempt that our stockholders may find beneficial.
Our second amended and restated certificate of incorporation, amended and restated bylaws and Delaware law contain provisions that could have the effect of rendering more difficult, or discouraging, an acquisition deemed undesirable by our board of directors. Our corporate governance documents include provisions:
•authorizing our board of directors, without further action by the stockholders, to issue blank check preferred stock;
•limiting the ability of our stockholders to call and bring business before special meetings and to take action by written consent in lieu of a meeting;
•requiring advance notice of stockholder proposals for business to be conducted at meetings of our stockholders and for nominations of candidates for election to our board of directors;
•authorizing our board of directors, without stockholder approval, to amend our amended and restated bylaws;
•limiting the determination of the number of directors on our board of directors and the filling of vacancies or newly created seats on our board of directors to our board of directors then in office; and
•subject to certain exceptions, limiting our ability to engage in certain business combinations with an "interested stockholder" for a three-year period following the time that the stockholder became an interested stockholder.
These provisions, alone or together, could delay hostile takeovers and changes in control of the Company or changes in our management.
Though we have opted out of the Delaware anti-takeover statute, our second amended and restated certificate of incorporation contains provisions that are similar to the Delaware anti-takeover statute, which may impair a takeover attempt that our stockholders may find beneficial. Any provision of our second amended and restated certificate of incorporation or amended and restated bylaws that has the effect of delaying or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our common stock, and could also affect the price that some investors are willing to pay for our common stock.
We do not currently intend to pay dividends on our common stock and, consequently, your ability to achieve a return on your investment will depend on appreciation in the price of our common stock.
We do not expect to pay dividends on our common stock. Any future dividend payments are within the discretion of our board of directors or a duly authorized committee of the board of directors and will depend on, among other things, our results of operations, working capital requirements, capital expenditure requirements, financial condition, level of indebtedness, contractual restrictions with respect to payment of dividends, business opportunities, anticipated cash needs, provisions of applicable law and other factors that our board of directors may deem relevant. In particular, our credit facility limits our ability to pay dividends from cash generated from operations. We may not generate sufficient cash from operations in the future to pay dividends on our common stock. See Item 5, "Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities-Dividend Policy."
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 1C. CYBERSECURITY
Risk Management
Thermon’s cybersecurity risk management system is a comprehensive framework that helps the Company identify, assess, and mitigate known cybersecurity risks. The system is designed to protect the confidentiality, integrity, and availability of the Company's information assets.
The system includes a risk assessment process that identifies and assesses the Company's cybersecurity risks. The risk assessment process is based on the security principles set forth in the National Institute of Standards and Technology ("NIST") Cybersecurity Framework and includes the following steps:
•Identification of assets
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•Identification of threats
•Identification of vulnerabilities
•Assessment of risk
The system is primarily implemented by the Company's cybersecurity team. This team is responsible for:
•Developing and implementing the risk assessment process
•Developing and implementing the risk mitigation strategy
•Developing and implementing the risk monitoring and reporting process
•Training the Company's employees on cybersecurity risk management
The Company's cybersecurity risk management system is reviewed and updated on an annual basis. This includes a comprehensive incident response plan. The review process is designed to ensure that the system remains effective and efficient as the cybersecurity threat landscape evolves.
The Company currently uses a third-party system for training our people on cybersecurity risks as well as strategies to mitigate those risks through interactive learning and tests. The Company tracks the compliance and performance of the relevant people who participate in the training. At least annually, the Company's Board of Directors (the "Board") receives updates regarding the cybersecurity risk profile and the effectiveness of the Company's cybersecurity risk management program.
Monitoring is another key component of the cybersecurity risk management system. We employ 24/7 monitoring and regular testing to mitigate threats and possible weaknesses. Additionally, we maintain insurance coverage for cybersecurity attacks.
Governance
The Company's Chief Executive Officer ("CEO"), through the appropriate reporting channels, is responsible for the cybersecurity risk management program. The Company's information technology department is responsible for developing and implementing the Company's cybersecurity policies, procedures, and strategies; overseeing the Company's cybersecurity risk assessment process; and monitoring the Company's cybersecurity risk profile. Our VP, Information Technology, who leads the information technology department, has over 15 years of experience with information security and information technology matters.
The Company's cybersecurity risk management program is subject to periodic review and updates. The Board is responsible for overseeing the Company's cybersecurity risk management program through the Audit Committee.
During the past year, there have been no material risks from cybersecurity threats or prior cybersecurity incidents that have materially affected or are reasonably likely to materially affect the Company’s business strategy, results of operations, or financial condition. Despite our cybersecurity risk management program and the associated controls, and those of our third-party providers, we may be vulnerable to cyber-attacks, computer viruses, security breaches, ransomware attacks, inadvertent or malicious employee actions, program failures, and other risks that could materially impact our financial condition, results of operations and/or cash flows.
For risks regarding cybersecurity and our information systems, please refer to Item 1A. “Risk Factors” in this annual report.
ITEM 2. PROPERTIES
Our headquarters and principal executive offices are located at 7171 Southwest Parkway, Building 300, Austin, Texas.
Our principal manufacturing and warehousing operations are located at our facilities in San Marcos, Texas. We own our principal manufacturing and warehousing facilities, and lease one ancillary manufacturing facility in San Marcos, Texas. All our reportable segments utilize our San Marcos, Texas facilities. In addition, we have offices and/or manufacturing and assembly locations in Chicago, Illinois, Morristown, Tennessee, Houston, Texas, Salt Lake City, Utah, Canada, the Netherlands, France, Italy, United Kingdom, Germany, Mexico, China, Korea, Japan, India, Australia, and Bahrain. All our manufacturing facilities are registered to International Organization for Standardization (ISO) 9001 quality standards. We believe that our production facilities are suitable for their purpose and are adequate to support our businesses.
ITEM 3. LEGAL PROCEEDINGS
For information on legal proceedings, see Note 14, "Commitments and Contingencies" to our consolidated financial statements contained elsewhere in this annual report, which is hereby incorporated by reference into this Item 3.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
The common stock of the Company trades on the NYSE under the symbol "THR." On May 20, 2026, the closing sale price of our common stock, as reported by the NYSE, was $65.43 and there were approximately 15 holders of our common stock of record.
Stock Performance
The following line graph and table present a comparison of cumulative total returns for our common stock on an annual basis over the last five fiscal years as compared to (i) the Russell 2000 Index, and (ii) the S&P SmallCap 600 - Capped Energy Index, in each case over the same period. The plotted points in the line graph are based on the closing price on the last trading date of the period. The values assume an initial investment of $100 was made in our common stock and the respective indexes on March 31, 2021 (the last day of our fiscal 2021), and assumes the reinvestment of dividends, as applicable. The stock price performance shown below is not necessarily indicative of future price performance.

| March 31, 2021 | March 31, 2022 | March 31, 2023 | March 31, 2024 | March 31, 2025 | March 31, 2026
Thermon Group Holdings, Inc. | $ | 100.00 |  | $ | 83.12 |  | $ | 127.86 |  | $ | 167.88 |  | $ | 142.89 |  | $ | 258.59 |
iShares Russell 2000 Index | $ | 100.00 |  | $ | 93.85 |  | $ | 82.86 |  | $ | 98.87 |  | $ | 94.95 |  | $ | 119.25 |
S&P SmallCap 600 Energy | $ | 100.00 |  | $ | 159.32 |  | $ | 146.89 |  | $ | 177.07 |  | $ | 133.05 |  | $ | 192.79 |

The information in this "Stock Performance" section shall not be deemed to be "soliciting material" or to be "filed" with the SEC or subject to Regulation 14A or 14C, or to the liabilities of Section 18 of the Exchange Act.
Dividend Policy
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Since our initial public offering in May 2011, we have not declared or paid any cash dividends on our capital stock, and we do not currently intend to pay any cash dividends on our common stock. We intend to retain earnings to finance the growth and development of our business and for working capital and general corporate purposes. We also use our cash to make unscheduled, voluntary principal repayments on our debt as well as make discretionary repurchases of outstanding shares of our common stock.
Any payment of dividends will be at the discretion of our board of directors and will depend upon our earnings, financial condition, capital requirements, level of indebtedness, contractual restrictions with respect to payment of dividends, restrictions imposed by applicable law and other factors. In particular, our credit facility limits our ability to pay dividends from cash generated from operations. See Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations-Liquidity and Capital Resources."
Equity Compensation Plan Information
For information on our equity compensation plans, see Item 12, "Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters-Equity Compensation Plan Information." See also Note 15, "Stock-Based Compensation" to our consolidated financial statements included elsewhere in this annual report.
Issuer Purchases of Equity Securities
In fiscal 2024, we announced the authorization from our board of directors to execute a share repurchase program of up to $50.0 million (the "Repurchase Program"). On May 22, 2025, the Company announced that the board of directors had refreshed the authorization back to $50.0 million for the repurchase of the Company's outstanding shares of common stock, exclusive of any fees, commissions or other expenses related to such repurchases. During fiscal 2026, we purchased 601,125 shares at a weighted average price of $26.21. As of March 31, 2026, we have $38.5 million of remaining unused and authorized availability under the Repurchase Program. We record shares of common stock repurchased at cost as treasury stock, resulting in a reduction of stockholders’ equity in the consolidated balance sheets.
We did not make any share repurchases during the three months ended March 31, 2026.
Recent Sales of Unregistered Securities
None.
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ITEM 6. [RESERVED]
Not applicable.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with, and is qualified in its entirety by reference to our consolidated financial statements and related notes included elsewhere in this annual report. The discussions in this section contain forward-looking statements that involve risks and uncertainties, including, but not limited to, those described in Item 1A, "Risk Factors." Actual results could differ materially from those discussed below. Please refer to the section entitled "Forward-Looking Statements."
Overview
For a complete overview of our business, please refer to Item 1. "Business" disclosed above in this annual report.
Recent Developments. On February 23, 2026, the Company entered into a definitive merger agreement (the “Merger Agreement”) with CECO Environmental Corp. (“CECO”) to combine the two companies in a stock‑and‑cash two-step merger transaction valued at approximately $2.2 billion (the “Merger”). The Merger is expected to create a global industrial leader in mission‑critical environmental and thermal solutions by combining CECO’s capabilities in environmental systems with the Company’s leadership in industrial process heating, heat tracing, and temperature management. Upon completion of the Merger, which is subject to customary closing conditions and regulatory and stockholder approvals, the combined company will operate under the CECO Environmental Corp. name and is expected to benefit from enhanced scale, expanded product offerings, and increased exposure to long‑term secular growth trends. The transaction is expected to close in June 2026. See also “Risks Relating to the Pending Merger with CECO Environmental” under Item 1A, “Risk Factors” for information regarding the additional risk factors related to the Merger.
The Company has incurred, and anticipates incurring additional, significant transaction‑related costs in connection with the Merger, including legal, accounting, financial advisory, and other professional fees, of which approximately $13 million was incurred during the three months ended March 31, 2026.
Revenue. Our revenues are derived from providing customers with a full suite of innovative and reliable process heating solutions, including advanced heating and filtration solutions for industrial and hazardous area applications. Revenue recognized at a point in time based on when control transitions to the customer is generally related to our product sales. Point in time revenue does not typically require engineering or installation services. Revenue recognized over time generally occurs on our projects where engineering or installation services, or a combination of the two, are required. We recognize revenue related to such projects in a systematic way that reflects the transfer of goods or services, or a combination of goods and services, to the customer.
We believe that our pipeline of planned projects, in addition to our backlog of signed purchase orders, provides us with visibility into our future revenue. Historically, we have experienced few order cancellations, and the cancellations that have occurred in the past have not been material compared to our total contract volume or total backlog. The small number of order cancellations is attributable in part to the fact that a large portion of our solutions are ordered and installed toward the end of large project construction. Our backlog at March 31, 2026 was $254.9 million as compared to $240.3 million at March 31, 2025. The timing of recognition of revenue out of backlog is not always certain, as it is subject to a variety of factors that may cause delays, many of which are beyond our control (such as, customers' delivery schedules and levels of capital and maintenance expenditures). When delays occur, the recognition of revenue associated with the delayed project is likewise deferred.
Cost of sales. Our cost of sales includes primarily the cost of raw material items used in the manufacture of our products, cost of ancillary products that are sourced from external suppliers and construction labor costs. Additional costs of sales include contract engineering costs directly associated with projects, direct labor costs, shipping and handling costs, and other costs associated with our manufacturing/fabrication operations. The other costs associated with our manufacturing/fabrication operations are primarily indirect production costs, including depreciation, indirect labor costs, warranty-related costs and the costs of manufacturing support functions such as logistics and quality assurance. Key raw material costs include polymers, copper, stainless steel, insulating material, electronic components and other miscellaneous parts related to products manufactured or assembled. We cannot provide any assurance that we will be able to mitigate potential raw material shortages or be able to pass along raw material cost increases, including the potential impacts of tariffs, to our customers in the future, and if we are unable to do so, our results of operations may be adversely affected.
Operating expenses. Our selling, general, and administrative expenses ("SG&A") are primarily comprised of compensation and related expenses for sales, marketing, pre-sales engineering and administrative personnel, as well as other
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sales related expenses and other expenses related to research and development, insurance, professional fees, the global integrated business information systems, and provisions for credit losses.
Key drivers affecting our results of operations. Our results of operations and financial condition are affected by numerous factors, including those described under the caption “Risk Factors” in Item 1A of this annual report. These factors include the following:
•Impact of product mix. Typically, our customers require our products as well as our engineering and construction services. The level of service and construction needs affect the profit margin for each type of revenue.
We tend to experience lower margins from our design optimization, engineering, installation and maintenance services, which are typically large projects tied to our customers' capital expenditure budgets and are comprised of more than $0.5 million in total revenue. For clarity, we will refer to these as "Over time large projects." Our results of operations in recent years have been impacted by the various construction phases of Over time large projects. We are typically designated as the heat tracing or heating system engineering provider of choice by the project owner. We then engage with multiple contractors to address incorporating various heat tracing solutions throughout the overall project. Our largest projects may generate revenue for several quarters. In the early stages of an Over time large project, our revenues are typically realized from the provision of engineering services. In the middle stages, or the material requirements phase, we typically experience the greatest demand for our heat tracing cable, at which point our revenues tend to accelerate. Revenues tend to decrease gradually in the final stages of a project and are generally derived from installation services and demand for electrical panels and other miscellaneous electronic components used in the final installation of heat tracing cable, which we frequently outsource from third-party manufacturers.
Projects that do not require installation and maintenance services are smaller in size and representative of maintenance, repairs and small upgrades necessary to improve efficiency and uptime. These small projects are typically tied to our customers' operating expense budgets, are generally less than $0.5 million in total revenue, and have relatively higher profit margins. We will refer to such projects as "Over time small projects."
The most profitable of our sales are derived from selling our heating products, for which we recognize revenue at a point in time. We also tend to experience lower margins from our outsourced products, such as electrical switch gears and transformers, than we do from our manufactured products. Accordingly, our results of operations are impacted by our mix of products and services.
We estimate that Point in time and Over time revenues have each contributed the following as a percentage of total revenue in the periods listed:

| Year-Ended March 31, 2026 |  | Year-Ended March 31, 2025 |  | Year-Ended March 31, 2024 |  |
Point in time | 70 | % |  | 71 | % |  | 61 | % |  |  |  |
Over time: | 30 | % |  | 29 | % |  | 39 | % |  |  |  |
Small projects | 12 | % |  | 14 | % |  | 15 | % |  |  |  |
Large projects | 18 | % |  | 15 | % |  | 24 | % |  |  |  |

Our Over time revenue includes (i) products and services which are billed on a time and materials basis, and (ii) fixed fee contracts for complex turnkey and other solutions such as some engineered products. For our time and materials service contracts, we recognize revenues as the products and services are provided over the term of the contract.
Our fixed fee projects typically offer our customers a comprehensive solution for heat tracing from the initial planning stage through engineering/design, manufacture, installation and final proof-of-performance and acceptance testing. Turnkey services also include project planning, product supply, system integration, commissioning and ongoing maintenance. Fixed fee projects, containing multiple deliverables, are customer specific, do not have an alternative use and have an enforceable right to payment, and thus are treated as a single performance obligation with revenues recognized over time as work progresses.
For revenue recognized under fixed fee contracts, we measure the costs incurred that contribute towards the satisfaction of our performance obligation as a percentage of the estimated total cost of production (the “cost-to-cost method”), and we recognize a proportionate amount of contract revenue, as the cost-to-cost method appropriately depicts performance towards satisfaction of the performance obligation. Changes to the original cost estimate may be required during the life of the contract and such estimates are reviewed on a regular basis. Sales
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and gross profits are adjusted using the cumulative catch-up method for revisions in estimated contract costs. Reviews of estimates have not generally resulted in significant adjustments to our results of operations.
Point in time revenue represents goods transferred to customers at a point in time and is recognized when obligations under the terms of the contract with the customer are satisfied; generally this occurs with the transfer of control upon shipment.
•Cyclicality of end users' markets. Demand for our products and services depends in large part upon the level of capital and maintenance expenditures of our customers and end users, in particular those in the energy, oil, gas, chemical processing and power generation industries, and firms that design and construct facilities for these industries. These customers' expenditures historically have been cyclical in nature and vulnerable to economic downturns. Large projects historically have been a substantial source of revenue growth, and large project revenues tend to be more cyclical than maintenance and repair revenues. A sustained decrease in capital and maintenance spending or in new facility construction by our customers could have a material adverse effect on the demand for our products and services and our business, financial condition and results of operations.
•Acquisition strategy. In recent years, we have been executing on a strategy to grow the Company through the acquisition of businesses that are either in the process heating solutions industry or provide complementary products and solutions for the markets and customers we serve. Refer to Note 2, "Acquisition," for more discussion.
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Results of Operations
The following table sets forth data from our statements of operations for the periods indicated.

Consolidated Statements of Operations Data | Fiscal Year Ended March 31, |  | Change
(Dollars in thousands) | 2026 |  | 2025 |  | $ |  | %
Sales | $ | 536,263 |  |  | $ | 498,207 |  |  | $ | 38,056 |  |  | 8 | %
Cost of sales | 293,207 |  |  | 275,311 |  |  | 17,896 |  |  | 7 | %
Gross profit | 243,056 |  |  | 222,896 |  |  | 20,160 |  |  | 9 | %
Operating expenses: |  |  |  |  |  |  |
Selling, general and administrative expenses | 158,290 |  |  | 129,307 |  |  | 28,983 |  |  | 22 | %
Deferred compensation plan expense/(income) | 599 |  |  | 452 |  |  | 147 |  |  | 33 | %
Amortization of intangible assets | 13,428 |  |  | 13,681 |  |  | (253) |  |  | (2) | %
Restructuring and other charges/(income) | — |  |  | (301) |  |  | 301 |  |  | (100) | %
Income from operations | 70,739 |  |  | 79,757 |  |  | (9,018) |  |  | (11) | %
Other income/(expenses): |  |  |  |  |  |  |
Interest expense, net | (7,995) |  |  | (10,325) |  |  | 2,330 |  |  | (23) | %
Other income/(expense) | 1,482 |  |  | 687 |  |  | 795 |  |  | 116 | %
Income before provision for income taxes | 64,226 |  |  | 70,119 |  |  | (5,893) |  |  | (8) | %
Income tax expense | 19,655 |  |  | 16,604 |  |  | 3,051 |  |  | 18 | %
Net income | $ | 44,571 |  |  | $ | 53,515 |  |  | $ | (8,944) |  |  | (17) | %
As a percent of sales: |  |  |  |  |  |  |
Gross profit | 45.3 | % |  | 44.7 | % |  | 60 bps |  |
Selling, general and administrative expenses | 29.5 | % |  | 26.0 | % |  | 350 bps |  |
Income from operations | 13.2 | % |  | 16.0 | % |  | (280 bps) |  |
Net income | 8.3 | % |  | 10.7 | % |  | (240 bps) |  |
Effective tax rate | 30.6 | % |  | 23.7 | % |  | 690 bps |  |

Year Ended March 31, 2026 ("fiscal 2026") Compared to the Year Ended March 31, 2025 ("fiscal 2025")
Revenues. The $38.1 million increase in fiscal 2026 compared to fiscal 2025 was driven primarily by higher project‑related and point in time activity, as well as contributions from the F.A.T.I. Acquisition, which completed in October 2024. Since the acquisition in October 2024, we have significantly expanded the F.A.T.I. business which has been bolstered by robust demand for electrification solutions in Europe as well as targeted commercial and operational initiatives. We experienced revenue growth in all geographic segments, with the exception of APAC, during fiscal 2026 compared to fiscal 2025. Revenue growth also reflected continued progress in portfolio diversification, with approximately 70% of total revenue derived from non‑oil and gas end markets, including industrial, commercial, power generation, and other diversified applications.
For fiscal 2026, revenue recognized at a point in time represented 70% of total revenue, reflecting strong demand for core products and improved pricing realization, while revenue recognized over time accounted for the remaining 30%. This compares to 71% point in time revenue and 29% over time revenue in fiscal 2025.
Segment performance varied during fiscal 2026 compared to fiscal 2025.
US-LAM revenue increased by $7.3 million, or 2.8%, to $263.3 million. The increase reflected growth in both revenue recognized at a point in time and revenue recognized over time. Point in time revenue increased by $3.9 million, or 2.0%, while over time revenue increased by $3.4 million, or 5.3%.
Canada revenue increased by $4.9 million, or 3.1%, to $163.8 million. The increase was driven primarily by higher revenue recognized over time, which increased by $4.1 million, or 8.4%, reflecting improved project activity. Revenue recognized at a point in time increased modestly by $0.8 million, or 0.7%.
EMEA revenue increased by $26.2 million, or 57.9%, to $71.6 million. The increase was driven by significant growth in revenue recognized at a point in time, which increased by $22.9 million, or 86.3%, as well as an increase of $3.3 million, or 17.6%, in revenue recognized over time. F.A.T.I. contributed $26.4 million in fiscal 2026, compared with $6.6 million for a partial year in fiscal 2025.
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APAC revenue decreased by $0.3 million, or 0.9%, to $37.6 million. Revenue recognized at a point in time declined by $3.3 million, or 13.8%, due to lower product sales and timing of customer orders, while revenue recognized over time increased by $3.0 million, or 22.2%, reflecting higher project activity. The increase in over‑time revenue partially offset the decline in point‑in‑time revenue.
Separately, revenue was positively affected in fiscal 2026 by foreign exchange rate impacts of approximately $6.1 million.
Gross profit. The increase in gross profit and gross margin were driven primarily by higher sales volumes, improved execution on project activity, pricing realization, and operational productivity improvements, partially offset by mix impacts and inflationary cost pressures.
Selling, general and administrative expenses. The increase in SG&A expense was driven primarily by higher variable compensation costs associated with performance above plan as well as charges approximating $12.9 million related to the announced Merger with CECO. SG&A as a percentage of sales increased by 350 basis points related to the above.
Deferred compensation plan expense/(income). The change in deferred compensation plan activity is primarily attributable to market fluctuations in the underlying balances owed to employees. This compensation plan expense/(income) is materially offset in Other income/(expense) where the Company records market gains/(losses) on related investment assets.
Amortization of intangible assets. The change in amortization of intangible assets is attributable to ordinary recurring amortization commensurate with the balances held in each fiscal 2026 and 2025.
Restructuring and other charges/(income). In the first quarter of fiscal 2025, we enacted a reduction-in-force as well as the closure of our Denver manufacturing facility as part of consolidating our overall manufacturing footprint. The sale of our Denver facility land and building resulted in a gain of $3.0 million, which more than offset the costs incurred for the reduction in force and facility consolidation. No such activity was present in fiscal 2026.
Interest expense, net. Interest expense, net declined compared to fiscal 2025, driven primarily by a reduction in the average interest rate to 5.51% from 6.44%. In addition, a lower average outstanding balance of $142.1 million in fiscal 2026, compared to $156.8 million in fiscal 2025, further contributed to the favorable change in interest expense. We amended our credit facility in fiscal 2026. See Note 12, "Long-Term Debt," for additional information.
Other income/(expense). The change in other income/(expense) primarily relates to market fluctuations in the underlying investments associated with our non-qualified deferred compensation plan. These unrealized gains and losses on investments were materially offset by deferred compensation plan expense/(income) as noted above.
Income taxes. Income tax expense was $19.7 million, or 30.6%, on pretax income of $64.2 million in fiscal 2026 as compared to income tax expense of $16.6 million, or 23.7%, on a pretax income of $70.1 million in fiscal 2025. Substantially all of the $12.9 million of SG&A expense related to the CECO Merger is not deductible for tax purposes, resulting in an increase of our effective tax rate of approximately 5.0% in fiscal 2026. Tax expense in fiscal 2025 included a $1.0 million, or 1.4%, reduction associated with the release of an uncertain tax position. See Note 17, “Income Taxes,” for further information.
Net income. The change in net income is explained by the changes noted in the sections above.
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Consolidated Statements of Operations Data | Fiscal Year Ended March 31, |  | Change
(Dollars in thousands) | 2025 |  | 2024 |  | $ |  | %
Sales | $ | 498,207 |  |  | $ | 494,629 |  |  | $ | 3,578 |  |  | 1 | %
Cost of sales | 275,311 |  |  | 283,065 |  |  | (7,754) |  |  | (3) | %
Gross profit | 222,896 |  |  | 211,564 |  |  | 11,332 |  |  | 5 | %
Operating expenses: |  |  |  |  |  |  |
Selling, general and administrative expenses | 129,307 |  |  | 123,820 |  |  | 5,487 |  |  | 4 | %
Deferred compensation plan expense/(income) | 452 |  |  | 1,231 |  |  | (779) |  |  | (63) | %
Amortization of intangible assets | 13,681 |  |  | 10,158 |  |  | 3,523 |  |  | 35 | %
Restructuring and other charges/(income) | (301) |  |  | 984 |  |  | (1,285) |  |  | (131) | %
Income from operations | 79,757 |  |  | 75,371 |  |  | 4,386 |  |  | 6 | %
Other income/(expenses): |  |  |  |  |  |  |
Interest expense, net | (10,325) |  |  | (8,845) |  |  | (1,480) |  |  | 17 | %
Other income/(expense) | 687 |  |  | 1,148 |  |  | (461) |  |  | (40) | %
Income before provision for income taxes | 70,119 |  |  | 67,674 |  |  | 2,445 |  |  | 4 | %
Income tax expense | 16,604 |  |  | 16,086 |  |  | 518 |  |  | 3 | %
Net income | $ | 53,515 |  |  | $ | 51,588 |  |  | $ | 1,927 |  |  | 4 | %
As a percent of sales: |  |  |  |  |  |  |
Gross profit | 44.7 | % |  | 42.8 | % |  | 190 bps |  |
Selling, general and administrative expenses | 26.0 | % |  | 25.0 | % |  | 100 bps |  |
Income from operations | 16.0 | % |  | 15.2 | % |  | 80 bps |  |
Net income | 10.7 | % |  | 10.4 | % |  | 30 bps |  |
Effective tax rate | 23.7 | % |  | 23.8 | % |  |  |  |

Year Ended March 31, 2025 ("fiscal 2025") Compared to the Year Ended March 31, 2024 ("fiscal 2024")
See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended March 31, 2025, filed with the SEC on May 22, 2025, for a discussion of the results of operations in fiscal 2025 as compared to fiscal 2024.
Contingencies
We are involved in various legal and administrative proceedings that arise from time to time in the ordinary course of doing business. Some of these proceedings may result in fines, penalties or judgments being assessed against us, which may adversely affect our financial results. In addition, from time to time, we are involved in various disputes, which may or may not be settled prior to legal proceedings being instituted and which may result in losses in excess of accrued liabilities, if any, relating to such unresolved disputes. As of March 31, 2026, management believes that adequate reserves have been established for any probable and reasonably estimable losses. Expenses related to litigation reduce operating income. We do not believe that the outcome of any of these proceedings or disputes would have a significant adverse effect on our financial position, long-term results of operations, or cash flows. It is possible, however, that charges related to these matters could be significant to our results of operations or cash flows in any one reporting period.
For information on legal proceedings, see Note 14, "Commitments and Contingencies" to our consolidated financial statements contained elsewhere in this annual report, which is hereby incorporated by reference into this Item 7.
To bid on or secure certain contracts, we are required at times to provide a performance guaranty to our customers in the form of a surety bond, standby letter of credit or foreign bank guaranty. On March 31, 2026, we had in place standby letters of credit, bank guarantees and performance bonds totaling $11.4 million to back our various customer contracts. In addition, our Indian subsidiary also has $3.9 million in customs bonds outstanding. Refer to Note 14, "Commitments and Contingencies" for more information on our letters of credit and bank guarantees.
In connection with the Merger with CECO, the Company has entered into an engagement with Morgan Stanley for financial advisory and related services, pursuant to which fees of approximately $33.1 million may become payable. As of the reporting date, no liability has been recorded for these fees, as the services giving rise to the obligation had not yet been rendered.
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Liquidity and Capital Resources
Our primary sources of liquidity are cash flows from operations and funds available under our revolving credit facility. Our primary liquidity needs are to finance our working capital, capital expenditures, debt service, share repurchases and potential future acquisitions.
Cash and cash equivalents. At March 31, 2026, we had $52.3 million in cash and cash equivalents. We manage our global cash requirements by maintaining cash and cash equivalents at various financial institutions throughout the world where we operate. Approximately $25.2 million, or 48%, of these amounts were held in domestic accounts with various institutions and approximately $27.1 million, or 52%, of these amounts were held in accounts outside of the U.S. with various financial institutions. While we have cash needs at our various foreign operations, excess cash is available for distribution to the U.S. through intercompany dividends.
Generally, we seek to maintain a cash and cash equivalents balance between $30.0 and $40.0 million. We will encounter periods where we may be above or below this range, due to, for example, inventory buildup for anticipated seasonal demand in fall and winter months, related cash receipts from credit sales in months that follow, debt maturities, restructuring activities, larger capital investments, severe and/or protracted economic downturns, acquisitions, share repurchases, or some combination of the above activities. The Company continues to manage its working capital requirements effectively through optimizing inventory levels, doing business with creditworthy customers, and extending payment terms with its supplier base.
In connection with the Merger with CECO, the Company has also entered into an engagement with Morgan Stanley for financial advisory and related services. Refer to Note 14, "Commitments and Contingencies" for more information.
Share repurchases
On May 22, 2025, the Company announced that the board of directors had refreshed the authorization back to $50.0 million for the repurchase of the Company's outstanding shares of common stock, exclusive of any fees, commissions or other expenses related to such repurchases. As of March 31, 2026, we have $38.5 million of remaining unused and authorized availability under the Repurchase Program. The Repurchase Program does not include a specific timetable or price targets and may be suspended or terminated at any time. Shares may be purchased through open market or privately negotiated transactions at the discretion of management based on its evaluation of prevailing market conditions and other factors. Refer to Note 6, "Net Income per Common Share" for more information.
Senior secured credit facility
See Note 12, “Long-Term Debt” to our consolidated financial statements and accompanying notes thereto included in Item 8 of this annual report for additional information on our senior secured term loan and revolving credit facilities, which are hereby incorporated by reference into this Item 7. At March 31, 2026, we had $19.7 million outstanding borrowings under our revolving credit facility and $94.3 million of available capacity thereunder, after taking into account the borrowing base and letters of credit outstanding, which totaled $1.0 million. From time to time, we may choose to utilize our revolving credit facility to fund operations, acquisitions or other investments, despite having cash available within our consolidated group in light of the cost, timing and other business considerations.
As of March 31, 2026, we had $121.4 million of outstanding principal on our term loan facilities, net of deferred debt issuance costs. Each of the term loans will amortize as set forth in the table below, with payments due on the first day of each January, April, July and October, with the balance of each term loan facility due at maturity.

Quarterly Installment Dates |  | Principal Amount
December 31, 2025, through September 30, 2026 |  | 1.250%
December 31, 2026, through June 30, 2030 |  | 1.875%

Future capital requirements
Our future capital requirements depend on many factors as noted throughout this report. We believe that, based on our current level of operations and related cash flows, plus cash on hand and available borrowings under our revolving credit facility, we will be able to meet our liquidity needs for the next 12 months and the foreseeable future.
We expect our capital expenditures to approximate 3% to 3.5% of revenue in fiscal 2027. Additionally, we will be required to pay $7.8 million in principal payments and approximately $6.1 million in interest payments on our long-term debt in the next 12 months. Our estimate of interest expense above was derived from our variable interest rates at March 31, 2026, and is subject to change. See further details in Note 12, "Long-Term Debt." We also have payment commitments of $1.7 million, mostly related to long-term information technology contracts, of which $1.0 million are due within the next 12 months.
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Selected Cash Flow Data: | Year Ended March 31,
(Dollars in thousands) | 2026 |  | 2025 |  | 2024
Total cash provided by/(used in): |  |  |  |  |
Operating activities | $ | 46,795 |  |  | $ | 63,118 |  |  | $ | 65,955 |
Investing activities | (13,081) |  |  | (14,970) |  |  | (109,522) |
Financing activities | (17,316) |  |  | (56,419) |  |  | 56,533 |
Free Cash Flow(1) |  |  |  |  |
Cash provided by operating activities | $ | 46,795 |  |  | $ | 63,118 |  |  | $ | 65,955 |
Less: Cash used for purchases of property, plant, and equipment | (13,931) |  |  | (10,249) |  |  | (11,016) |
Free Cash Flow | $ | 32,864 |  |  | $ | 52,869 |  |  | $ | 54,939 |

(1) "Free Cash Flow" is a non-GAAP financial measure, which we define as net cash provided by operating activities less cash used for the purchase of property, plant, and equipment. Free Cash Flow is one measure management uses internally to assess liquidity. Our calculation may not be comparable to similarly titled measures reported by other companies. See further discussion of Non-GAAP Financial Measures below.
Year Ended March 31, 2026 ("fiscal 2026") Compared to the Year Ended March 31, 2025 ("fiscal 2025")
Net cash provided by/(used in) operating activities. Net cash provided by operating activities declined primarily due to relatively greater cash used in working capital needs, such as accounts receivable and inventory, which resulted from improved business activity and demand for liquid load bank products. Additionally, net income was lower in fiscal 2026, mainly as a result of the transaction costs in connection with the Merger with CECO. This collective use of cash was partially offset by higher non-cash activity, such as increased stock compensation expense.
Net cash provided by/(used in) investing activities. Cash used in investing activities decreased in fiscal 2026 compared to fiscal 2025. In fiscal 2025, we acquired F.A.T.I., while no acquisitions were made in fiscal 2026. Additionally, fiscal 2025 included $5.8 million of proceeds from the sale of our Denver property, with no similar transaction in fiscal 2026. These fiscal 2025 items resulted in a net use of cash. The relative year over decrease caused by these items was mostly muted by relatively higher capital expenditures in fiscal 2026.
Net cash provided by/(used in) financing activities. Cash used in financing activities decreased in fiscal 2026 compared to fiscal 2025, primarily due to lower payments against term and revolving debt as a result of relatively lower cash flows from operations as described above. Plus, the Company maintained a relatively higher cash balance at the end of fiscal 2026 versus the prior year.
Free Cash Flow (Non-GAAP)
In addition to evaluating our cash flow generation based upon operating, investing, and financing activities, the Company believes that Free Cash Flow as used in this section may provide investors and key stakeholders with another important perspective regarding our performance. The Company does not intend for this non-GAAP metric to be a substitute for the related GAAP measure, nor should it be viewed in isolation and without considering all relevant GAAP measurements. Moreover, our calculation may not be comparable to similarly titled measures reported by other companies. Refer to the reconciliation of cash provided by/(used in) operating activities to Free Cash Flow under "Non-GAAP Financial Measures" below.
We define “Free Cash Flow” as net cash provided by operating activities less cash used for the purchase of property, plant, and equipment. This metric should not be interpreted to mean the remaining cash that is available for discretionary spending, dividends, share repurchases, acquisitions, or other purposes, as it excludes significant, mandatory obligations, such as principal payments on the Company’s long-term debt facility. Free cash flow is one measure that the Company uses internally to assess liquidity.
Free Cash Flow totaled $32.9 million for fiscal 2026 as compared to $52.9 million for fiscal 2025, a decrease primarily due to lower cash flows from operations, which stemmed from the investments in inventory and other working capital needs as described above.
Year Ended March 31, 2025 ("fiscal 2025") Compared to the Year Ended March 31, 2024 ("fiscal 2024")
See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended March 31, 2025, filed with the SEC on May 22, 2025, for a discussion of net cash provided by operating activities, net cash used in investing activities and net cash provided by (used in) financing activities in fiscal 2025 as compared to fiscal 2024.
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Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements not already disclosed. In addition, we do not have any interest in entities commonly referred to as variable interest entities, which include special purpose entities and other structured finance entities.
Critical Accounting Policies and Estimates
The preparation of our financial statements in accordance with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures of contingent assets and liabilities. We base our estimates on past experience and other assumptions that we believe are reasonable under the circumstances, and we evaluate these estimates on an ongoing basis. Our critical accounting policies are those that materially affect our financial statements and involve difficult, subjective or complex judgments by management. Our most significant financial statement estimates include revenue recognition and valuation of goodwill and other intangible assets.
Although these estimates are based on management's best knowledge of current events and actions that may impact the Company in the future, actual results may be materially different from the estimates.
Revenue recognition. Refer to Note 1, "Organization and Summary of Significant Accounting Policies" of our consolidated financial statements included below in Item 8 of this annual report for further discussion.
Valuation of goodwill and other intangible assets. Refer to Note 1, "Organization and Summary of Significant Accounting Policies" of our consolidated financial statements included below in Item 8 of this annual report for further discussion.
Non-GAAP Financial Measures
Disclosure in this annual report of "Adjusted EPS," "Adjusted EBITDA," "Adjusted Net Income," and "Free Cash Flow," which are "non-GAAP financial measures" as defined under the rules of the Securities and Exchange Commission (the "SEC"), are intended as supplemental measures of our financial performance that are not required by, or presented in accordance with, U.S. generally accepted accounting principles ("GAAP"). "Adjusted Net Income" and "Adjusted fully diluted earnings per share" ("Adjusted EPS") represents net income attributable to Thermon before costs related to acceleration of unamortized debt costs, the tax benefit from income tax rate reductions in certain foreign jurisdictions, withholding tax on dividend related to the debt amendment, amortization of intangible assets, transaction-related costs, the income tax effect on any non-tax adjustments, costs associated with our restructuring and other income/(charges), other impairment charges/(income), and loss on debt extinguishment, per fully-diluted common share in the case of Adjusted EPS. "Adjusted EBITDA" represents net income attributable to Thermon before interest expense (net of interest income), income tax expense, depreciation and amortization expense, stock-based compensation expense, impairment and other charges/(income), loss on debt extinguishment, transaction-related costs, expenses associated with our restructuring and other income/(charges), and expenses related to our Enterprise Resource Planning ("ERP") system implementation. "Free cash flow" represents cash provided by operating activities less cash used for the purchase of property, plant and equipment.
We believe these non-GAAP financial measures are meaningful to our investors to enhance their understanding of our financial performance and are frequently used by securities analysts, investors and other interested parties to compare our performance with the performance of other companies that report Adjusted EPS, Adjusted EBITDA, or Adjusted Net Income. Adjusted EPS, Adjusted EBITDA, and Adjusted Net Income should be considered in addition to, not as substitutes for income from operations, net income, net income per share, and other measures of financial performance reported in accordance with GAAP. We provide Free Cash Flow as one measure of our liquidity. Note that our calculation of Adjusted EPS, Adjusted EBITDA, Adjusted Net Income, and Free Cash Flow may not be comparable to similarly titled measures reported by other companies.
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The following table reconciles net income to Adjusted EBITDA for the periods presented:

| Year Ended March 31,
(Dollars in thousands) | 2026 |  | 2025 |  | 2024
Net income | $ | 44,571 |  |  | $ | 53,515 |  |  | $ | 51,588 |
Interest expense, net | 7,995 |  |  | 10,325 |  |  | 8,845 |
Income tax expense | 19,655 |  |  | 16,604 |  |  | 16,086 |
Depreciation and amortization | 22,466 |  |  | 22,339 |  |  | 18,837 |
EBITDA (non-GAAP) | $ | 94,687 |  |  | $ | 102,783 |  |  | $ | 95,356 |
Stock-based compensation | 8,244 |  |  | 5,244 |  |  | 5,754 |
Transaction-related costs(1) | 12,894 |  |  | 355 |  |  | 2,107 |
Restructuring and other charges/(income)(2) | 1,334 |  |  | 292 |  |  | 984 |
Debt issuance costs(3) | 523 |  |  | — |  |  | — |
ERP implementation-related costs | 1,904 |  |  | 557 |  |  | — |
Adjusted EBITDA (non-GAAP) | $ | 119,586 |  |  | $ | 109,231 |  |  | $ | 104,201 |

(1) Fiscal 2026 charges relate to the pending Merger with CECO. Fiscal 2025 charges relate to the October 2024 F.A.T.I. acquisition.
(2) Fiscal 2026 charges associated with cost-cutting measures. Fiscal 2025 charges associated with cost-cutting measures including reduction-in-force and facility consolidation, of which $0.1 million are in cost of sales.
(3) Debt issuance costs related to the July 2025 refinancing of the Company's credit facility.
The following table reconciles net income to Adjusted Net Income and Adjusted EPS for the periods presented:

|  | Year ended March 31,
(Dollars in thousands, except per share data) | 2026 |  | 2025 |  | 2024
Net income | $ | 44,571 |  |  | $ | 53,515 |  |  | $ | 51,588 |
Amortization of intangible assets | 13,428 |  |  | 13,681 |  |  | 10,158 |
Transaction-related costs(1) | 12,894 |  |  | 355 |  |  | 2,107 |
Restructuring and other charges/(income)(2) | 1,334 |  |  | 292 |  |  | 984 |
ERP implementation-related costs | 1,904 |  |  | 557 |  |  | — |
Tax benefit from the release of uncertain tax position reserve | — |  |  | (1,046) |  |  | — |
Debt issuance costs(3) | 523 |  |  | — |  |  | — |
Tax effect of adjustments | (4,132) |  |  | (3,582) |  |  | (2,947) |
Adjusted net income (non-GAAP) | $ | 70,522 |  |  | $ | 63,772 |  |  | $ | 61,890 |
Adjusted fully diluted earnings per common share (non-GAAP) | $ | 2.15 |  |  | $ | 1.87 |  |  | $ | 1.82 |
Fully-diluted common shares - (thousands) | 32,800 |  |  | 34,058 |  |  | 34,067 |

(1) Fiscal 2026 charges relate to the pending Merger with CECO. Fiscal 2025 charges relate to the October 2024 F.A.T.I. acquisition.
(2) Fiscal 2026 charges associated with cost-cutting measures. Fiscal 2025 charges associated with cost-cutting measures including reduction-in-force and facility consolidation, of which $0.1 million are in cost of sales.
(3) Debt issuance costs related to the July 2025 refinancing of the Company's credit facility.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Our primary market risk exposures include the effect of fluctuations in foreign exchange rates, interest rates and commodity prices.
Foreign currency risk related to operations. We transact business globally and are subject to risks associated with fluctuating foreign exchange rates. Approximately 51% of our fiscal 2026 consolidated revenues were generated by sales from our non-U.S. subsidiaries. Our non-U.S. subsidiaries generally sell their products and services in the local currency, but obtain a significant amount of their products from our manufacturing facilities located elsewhere, primarily the U.S., Canada and Europe. Significant changes in the relevant exchange rates could adversely affect our margins on foreign sales of products. Our non-U.S. subsidiaries incur most of their expenses (other than intercompany expenses) in their local functional currency. These
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currencies include the Canadian Dollar, Euro, British Pound, Australian Dollar, South Korean Won, Chinese Renminbi, Indian Rupee, Mexican Peso, and Japanese Yen.
We have established a program that primarily utilizes foreign currency forward contracts to offset the risk associated with the effects of certain foreign currency exposures. Under this program, increases or decreases in our foreign currency exposures are offset by gains or losses on the forward contracts, to mitigate the possibility of foreign currency transaction gains or losses. These foreign currency exposures typically arise from intercompany transactions. Our forward contracts generally have terms of 30 days or less. We do not use forward contracts for trading purposes nor do we designate these forward contracts as hedging instruments pursuant to Accounting Standards Codification ("ASC") Topic 815, Derivatives and Hedging. We adjust the carrying amount of all contracts to their fair value at the end of each reporting period and unrealized gains and losses are included in our results of operations for that period. These gains and losses largely offset gains and losses resulting from settlement of payments received from our foreign operations which are settled in U.S. dollars. All outstanding foreign currency forward contracts are marked to market at the end of the period with unrealized gains and losses included in Other income/(expense). The fair value is determined by quoted prices on identical forward contracts (Level 2 fair value). The balance sheet reflects unrealized gains within accounts receivable and unrealized losses within accrued liabilities. Our ultimate realized gain or loss with respect to currency fluctuations will depend on the currency exchange rates and other factors in effect as the contracts mature. As of March 31, 2026 and 2025, the notional amounts of forward contracts we held to buy U.S. dollars in exchange for other major international currencies were $10.4 million and $16.8 million, respectively.
During fiscal 2026, our largest exposures to foreign exchange rates consisted primarily of the Canadian Dollar and the Euro against the U.S. dollar. The market risk related to the foreign currency exchange rates is measured by estimating the potential impact of a 10% change in the value of the U.S. dollar relative to the local currency exchange rates. The rates used to perform this analysis were based on a weighted average of the market rates in effect during the relevant period. A 10% appreciation of the U.S. dollar relative to the Canadian Dollar would result in a net decrease in net income of $3.0 million for fiscal 2026. Conversely, a 10% depreciation of the U.S. dollar relative to the Canadian Dollar would result in a net increase in net income of $3.6 million for fiscal 2026. A 10% appreciation of the U.S. dollar relative to the Euro would result in a net decrease in net income of $0.8 million for fiscal 2026. Conversely, a 10% depreciation of the U.S. dollar relative to the Euro would result in a net increase in net income of $1.0 million for fiscal 2026.
The geographic areas outside the U.S. in which we operate are generally not considered to be highly inflationary. Nonetheless, these foreign operations are sensitive to fluctuations in currency exchange rates arising from, among other things, certain intercompany transactions that are generally denominated in U.S. dollars rather than their respective functional currencies. Net of forward contracts, the impact of foreign currency transactions on our consolidated statements of operations were losses of $0.7 million and gains of $0.1 million in fiscal 2026 and fiscal 2025, respectively.
Because our consolidated financial results are reported in U.S. dollars, and we generate a substantial amount of our sales and earnings in other currencies, the translation of those results into U.S. dollars can result in a significant increase or decrease in the amount of those sales and earnings. In addition, fluctuations in currencies relative to the U.S. dollar may make it more difficult to perform period-to-period comparisons of our reported results of operations. In fiscal 2026, we estimate that our sales were positively impacted by $6.1 million when compared to foreign exchange translation rates that were in effect in fiscal 2025. Foreign currency impact on revenue is calculated by comparing actual current period revenue in U.S. dollars to theoretical U.S. Dollar revenue we would have achieved based on the weighted-average foreign exchange rates in effect in the comparative prior periods for all applicable foreign currencies. At each balance sheet date, we translate our assets and liabilities denominated in foreign currency to U.S. dollars. The balances of our foreign equity accounts are translated at their historical values. The difference between the current rates and the historical rates are posted to our currency translation account and reflected in the equity section of our balance sheet. The effect of foreign currency translation was a gain of $10.0 million in fiscal 2026 and loss of $15.5 million in fiscal 2025. Currency translation gains or losses are reported as part of comprehensive income or loss in our accompanying consolidated financial statements.
Foreign currency risks related to intercompany notes. Refer to Note 3, "Fair Value Measurements" for more information. Also, refer to Item 1A, "Risk Factors" for further discussion regarding our risk as it relates to foreign currency.
Interest rate risk and foreign currency risk relating to debt. Borrowings under both our variable rate term loan A credit facility and revolving credit facility incur interest expense that is variable in relation to the SOFR rate. The interest rate for borrowings under our term loan A credit facility was 5.17% for the U.S. term loan as of March 31, 2026. Based on historical balances on our revolving credit facility, we do not anticipate that a one percent increase or decrease in our interest rate would have a significant impact on our operations. We cannot provide any assurances that historical revolver borrowings will be reflective of our future use of the revolving credit facility. As of March 31, 2026, we had $19.7 million outstanding principal under our revolving credit facility.
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As of March 31, 2026, we had $121.9 million of outstanding principal under our variable rate SOFR-based term loan A credit facilities. Based on the outstanding borrowings, a one percent change in the interest rate would result in a $1.4 million increase or decrease in our annual interest expense.
Commodity price risk. We use various commodity-based raw materials in our manufacturing processes. Generally, we acquire such components at market prices and do not typically enter into long-term purchase commitments with suppliers or hedging instruments to mitigate commodity price risk. As a result, we are subject to market risks related to changes in commodity prices and supplies of key components of our products. Historically, the costs of our primary raw materials have been stable and readily available from multiple suppliers. Typically, we have been able to pass on raw material cost increases to our customers. We cannot provide any assurance, however, that we may be able to pass along such cost increases, including the impact of tariffs, to our customers or source sufficient amounts of key components on commercially reasonable terms or at all in the future, and if we are unable to do so, our results of operations may be adversely affected.
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

| Page
Audited Financial Statements of Thermon Group Holdings, Inc. and its Consolidated Subsidiaries |
Reports of Independent Registered Public Accounting Firm (PCAOB ID: 185) | 38
Consolidated Statements of Operations and Comprehensive Income for each of the three years ended March 31, 202 6, 202 5 and 202 4 | 41
Consolidated Balance Sheets as of March 31, 202 6 and 202 5 | 42
Consolidated Statements of Equity for each of the three years ended March 31, 202 6, 202 5, and 202 4 | 43
Consolidated Statements of Cash Flows for each of the three years ended March 31, 202 6, 202 5, and 202 4 | 44
Notes to Consolidated Financial Statements | 45

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Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors
Thermon Group Holdings, Inc.:
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Thermon Group Holdings, Inc. and subsidiaries (the Company) as of March 31, 2026 and 2025, the related consolidated statements of operations and comprehensive income, equity, and cash flows for each of the years in the three-year period ended March 31, 2026, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of March 31, 2026 and 2025, and the results of its operations and its cash flows for each of the years in the three-year period ended March 31, 2026, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of March 31, 2026, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated May 21, 2026 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Evaluation of estimated costs at completion for revenue recognized over time under select fixed fee contracts
As discussed in Notes 1 and 5 to the consolidated financial statements, the Company recognizes a proportionate amount of contract revenue for fixed fee contracts using the cost-to-cost method, which depicts performance towards satisfaction of the performance obligation. For the year ended March 31, 2026, the Company recognized $160,711 thousand of over time revenues, which included revenue recognized under fixed fee contracts.
We identified the evaluation of estimated costs at completion for revenue recognized over time under select fixed fee contracts as a critical audit matter. A high degree of subjective auditor judgment was required because of the variability and inherent uncertainty associated with the estimated costs of material and labor to complete contracts.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s revenue recognition process for fixed fee contracts, including controls related to contract review and setup, project cost accumulation, monitoring of project status and estimated costs at completion. For a selection of fixed fee contracts, we evaluated the estimated costs at completion by:
•inspecting the underlying contract and related amendments to obtain an understanding of the contractual requirements and related performance obligations
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•inquiring of financial and operational personnel of the Company to identify factors that should be considered within the estimated costs at completion or indications of potential management bias
•comparing a selection of costs of material and labor in the estimated costs at completion to source documents, costs incurred to date on the project and costs incurred on similar projects
•comparing management’s prior forecasts of estimated costs of material and labor to actual results to evaluate management’s ability to accurately forecast.
/s/ KPMG LLP
We have served as the Company’s auditor since 2013.
Austin, Texas
May 21, 2026
39

Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors
Thermon Group Holdings, Inc.:
Opinion on Internal Control Over Financial Reporting
We have audited Thermon Group Holdings, Inc. and subsidiaries' (the Company) internal control over financial reporting as of March 31, 2026, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of March 31, 2026, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of March 31, 2026 and 2025, the related consolidated statements of operations and comprehensive income, equity, and cash flows for each of the years in the three-year period ended March 31, 2026, and the related notes (collectively, the consolidated financial statements), and our report dated May 21, 2026 expressed an unqualified opinion on those consolidated financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ KPMG LLP
Austin, Texas
May 21, 2026
40

Thermon Group Holdings, Inc.
Consolidated Statements of Operations and Comprehensive Income
(U.S. Dollars in thousands, except share and per share data)

|  | Year Ended March 31, 2026 |  | Year Ended March 31, 2025 |  | Year Ended March 31, 2024
Sales |  | $ | 536,263 |  |  | $ | 498,207 |  |  | $ | 494,629 |
Cost of sales |  | 293,207 |  |  | 275,311 |  |  | 283,065 |
Gross profit |  | 243,056 |  |  | 222,896 |  |  | 211,564 |
Operating expenses: |  |  |  |  |  |
Selling, general and administrative expenses |  | 158,290 |  |  | 129,307 |  |  | 123,820 |
Deferred compensation plan expense/(income) |  | 599 |  |  | 452 |  |  | 1,231 |
Amortization of intangible assets |  | 13,428 |  |  | 13,681 |  |  | 10,158 |
Restructuring and other charges/(income) |  | — |  |  | (301) |  |  | 984 |
Income from operations |  | 70,739 |  |  | 79,757 |  |  | 75,371 |
Other income/(expenses): |  |  |  |  |  |
Interest expense, net |  | (7,995) |  |  | (10,325) |  |  | (8,845) |
Other income/(expense) |  | 1,482 |  |  | 687 |  |  | 1,148 |
Income before provision for income taxes |  | 64,226 |  |  | 70,119 |  |  | 67,674 |
Income tax expense |  | 19,655 |  |  | 16,604 |  |  | 16,086 |
Net income |  | 44,571 |  |  | 53,515 |  |  | 51,588 |
Other comprehensive income: |  |  |  |  |  |
Net income |  | $ | 44,571 |  |  | $ | 53,515 |  |  | $ | 51,588 |
Foreign currency translation adjustment |  | 10,011 |  | (15,515) |  |  | 836 |
Other |  | — |  |  | (79) |  |  | 29 |
Total comprehensive income |  | $ | 54,582 |  |  | $ | 37,921 |  |  | $ | 52,453 |
Net income per common share: |  |  |  |  |  |
Basic |  | $ | 1.37 |  |  | $ | 1.59 |  |  | $ | 1.53 |
Diluted |  | 1.36 |  |  | 1.57 |  |  | 1.51 |
Weighted-average shares used in computing net income per common share: |  |  |  |  |  |
Basic |  | 32,540,731 |  |  | 33,707,804 |  |  | 33,670,861 |
Diluted |  | 32,800,016 |  |  | 34,058,239 |  |  | 34,066,987 |

The accompanying notes are an integral part of these consolidated financial statements
41

Thermon Group Holdings, Inc.
Consolidated Balance Sheets
(U.S. Dollars in thousands, except share and per share data)

| March 31, 2026 |  | March 31, 2025
Assets |  |  |
Current assets: |  |  |
Cash and cash equivalents | $ | 52,275 |  |  | $ | 39,537 |
Accounts receivable, net of allowances of $1,355 and $1,230 as of March 31, 2026 and 2025, respectively | 125,414 |  |  | 109,830 |
Inventories, net | 118,148 |  |  | 88,980 |
Contract assets | 26,737 |  |  | 19,188 |
Prepaid expenses and other current assets | 18,574 |  |  | 16,526 |
Income tax receivable | 53 |  |  | 231 |
Total current assets | $ | 341,201 |  |  | $ | 274,292 |
Property, plant and equipment, net of depreciation and amortization of $81,934 and $75,773 as of March 31, 2026 and 2025, respectively | 79,739 |  |  | 72,824 |
Goodwill | 269,041 |  |  | 264,331 |
Intangible assets, net | 103,660 |  |  | 115,283 |
Operating lease right-of-use assets | 14,783 |  |  | 11,192 |
Deferred income taxes | 1,121 |  |  | 895 |
Other non-current assets | 21,030 |  |  | 16,635 |
Total assets | $ | 830,575 |  |  | $ | 755,452 |
Liabilities and equity |  |  |
Current liabilities: |  |  |
Accounts payable | $ | 41,110 |  |  | $ | 31,185 |
Accrued liabilities | 49,779 |  |  | 35,788 |
Current portion of long-term debt | 7,813 |  |  | 18,000 |
Contract liabilities | 19,471 |  |  | 19,604 |
Lease liabilities | 4,701 |  |  | 4,023 |
Income taxes payable | 3,962 |  |  | 4,063 |
Total current liabilities | $ | 126,836 |  |  | $ | 112,663 |
Borrowings under revolving credit facility | 19,700 |  |  | — |
Long-term debt, net of current maturities and deferred debt issuance costs of $503 and $508 as of March 31, 2026 and 2025, respectively | 113,559 |  |  | 120,366 |
Deferred income taxes | 10,861 |  |  | 9,756 |
Non-current lease liabilities | 12,099 |  |  | 9,299 |
Other non-current liabilities | 8,813 |  |  | 8,053 |
Total liabilities | $ | 291,868 |  |  | $ | 260,137 |
Equity |  |  |
Common stock: $.001 par value; 150,000,000 authorized; 34,169,520 issued and 32,866,352 outstanding, and 33,945,413 shares issued and 33,243,370 outstanding at March 31, 2026 and 2025, respectively | 33 |  |  | 33 |
Preferred stock: $.001 par value; 10,000,000 authorized; no shares issued and outstanding | — |  |  | — |
Additional paid-in capital | 250,785 |  |  | 246,201 |
Treasury stock, common stock, at cost; 1,303,168 and 702,043 shares at March 31, 2026 and 2025, respectively | (36,162) |  |  | (20,388) |
Accumulated other comprehensive loss | (62,818) |  |  | (72,829) |
Retained earnings | 386,869 |  |  | 342,298 |
Total equity | $ | 538,707 |  |  | $ | 495,315 |
Total liabilities and equity | $ | 830,575 |  |  | $ | 755,452 |

The accompanying notes are an integral part of these consolidated financial statements
42

Thermon Group Holdings, Inc.
Consolidated Statements of Equity
(U.S. Dollars in thousands, except share and per share data)

|  |  | Common Stock Outstanding |  | Common Stock |  | Additional Paid-in Capital |  | Treasury Stock |  | Retained Earnings |  | Accumulated Other Comprehensive Income (Loss) |  | Total
Balances at March 31, 2023 | 33,508,076 |  |  | $ | 33 |  |  | $ | 239,860 |  |  | $ | — |  |  | $ | 237,195 |  |  | $ | (58,100) |  |  | $ | 418,988 |
Issuance of common stock as deferred compensation to directors | 22,829 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Issuance of common stock as deferred compensation to employees | 98,177 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Issuance of common stock as deferred compensation to executive officers | 101,161 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Stock compensation expense | — |  |  | — |  |  | 5,754 |  |  | — |  |  | — |  |  | — |  |  | 5,754 |
Repurchase of employee stock units on vesting | — |  |  | — |  |  | (2,058) |  |  | — |  |  | — |  |  | — |  |  | (2,058) |
Repurchase of shares under authorized program | (8,018) |  |  | — |  |  | — |  |  | (250) |  |  | — |  |  | — |  |  | (250) |
Net income | — |  |  | — |  |  | — |  |  |  |  | 51,588 |  |  | — |  |  | 51,588 |
Foreign currency translation adjustment | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 836 |  |  | 836 |
Other | — |  |  | 1 |  |  | (1) |  |  | — |  |  | — |  |  | 29 |  |  | 29 |
Balances at March 31, 2024 | 33,722,225 |  |  | $ | 34 |  |  | $ | 243,555 |  |  | $ | (250) |  |  | $ | 288,783 |  |  | $ | (57,235) |  |  | $ | 474,887 |
Issuance of common stock in exercise of stock options | 33,573 |  |  | — |  |  | 632 |  |  | — |  |  | — |  |  | — |  |  | 632 |
Issuance of common stock as deferred compensation to directors | 21,802 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Issuance of common stock as deferred compensation to employees | 72,013 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Issuance of common stock as deferred compensation to executive officers | 87,782 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Stock compensation expense | — |  |  | — |  |  | 5,244 |  |  | — |  |  | — |  |  | — |  |  | 5,244 |
Repurchase of employee stock units on vesting | — |  |  | — |  |  | (3,230) |  |  | — |  |  | — |  |  | — |  |  | (3,230) |
Repurchase of shares under authorized program | (694,025) |  |  | — |  |  | — |  |  | (20,138) |  |  | — |  |  | — |  |  | (20,138) |
Net income | — |  |  | — |  |  | — |  |  | — |  |  | 53,515 |  |  | — |  |  | 53,515 |
Foreign currency translation adjustment | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (15,515) |  |  | (15,515) |
Other | — |  |  | (1) |  |  | — |  |  | — |  |  | — |  |  | (79) |  |  | (80) |
Balances at March 31, 2025 | 33,243,370 |  |  | $ | 33 |  |  | $ | 246,201 |  |  | $ | (20,388) |  |  | $ | 342,298 |  |  | $ | (72,829) |  |  | $ | 495,315 |
Issuance of common stock in exercise of stock options | 5,074 |  |  | — |  |  | 72 |  |  | — |  |  | — |  |  | — |  |  | 72 |
Issuance of common stock as deferred compensation to directors | 22,851 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Issuance of common stock as deferred compensation to employees | 90,952 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Issuance of common stock as deferred compensation to executive officers | 105,230 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Stock compensation expense | — |  |  | — |  |  | 8,244 |  |  | — |  |  | — |  |  | — |  |  | 8,244 |
Repurchase of employee stock units on vesting | — |  |  | — |  |  | (3,732) |  |  | — |  |  | — |  |  | — |  |  | (3,732) |
Repurchase of shares under authorized program | (601,125) |  |  | — |  |  | — |  |  | (15,774) |  |  | — |  |  | — |  |  | (15,774) |
Net income | — |  |  | — |  |  | — |  |  | — |  |  | 44,571 |  |  | — |  |  | 44,571 |
Foreign currency translation adjustment | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 10,011 |  |  | 10,011 |
Other | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Balances at March 31, 2026 | 32,866,352 |  |  | $ | 33 |  |  | $ | 250,785 |  |  | $ | (36,162) |  |  | $ | 386,869 |  |  | $ | (62,818) |  |  | $ | 538,707 |

The accompanying notes are an integral part of these consolidated financial statements
43

Thermon Group Holdings, Inc.
Consolidated Statements of Cash Flows
(U.S. Dollars in thousands)

| Year Ended March 31, 2026 |  | Year Ended March 31, 2025 |  | Year Ended March 31, 2024
Operating activities |  |  |  |  |
Net income | $ | 44,571 |  |  | $ | 53,515 |  |  | $ | 51,588 |
Adjustment to reconcile net income to net cash provided by operating activities: |  |  |  |  |
Depreciation and amortization | 22,466 |  |  | 22,339 |  |  | 18,837 |
Amortization of debt costs | 497 |  |  | 486 |  |  | 489 |
Stock compensation expense | 8,244 |  |  | 5,244 |  |  | 5,754 |
Deferred income taxes | 619 |  |  | (1,081) |  |  | (2,079) |
Reserve release for uncertain tax positions | — |  |  | (1,046) |  |  | 84 |
Remeasurement (gain)/loss on intercompany balances | (75) |  |  | 36 |  |  | (784) |
Changes in operating assets and liabilities: |  |  |  |  |
Accounts receivable | (13,205) |  |  | (4,220) |  |  | (540) |
Inventories | (28,021) |  |  | (698) |  |  | 3,778 |
Contract assets and liabilities | (7,736) |  |  | (6,655) |  |  | (101) |
Other current and non-current assets | (3,089) |  |  | (9,402) |  |  | (4,935) |
Accounts payable | 8,485 |  |  | (1,156) |  |  | 2,707 |
Accrued liabilities and non-current liabilities | 14,083 |  |  | 3,410 |  |  | (6,355) |
Income taxes payable and receivable | (44) |  |  | 2,346 |  |  | (2,488) |
Net cash provided by operating activities | $ | 46,795 |  |  | $ | 63,118 |  |  | $ | 65,955 |
Investing activities |  |  |  |  |
Purchases of property, plant and equipment | $ | (13,931) |  |  | $ | (10,249) |  |  | $ | (11,016) |
Sales of rental equipment | 850 |  |  | 65 |  |  | 99 |
Proceeds from sale of property, plant and equipment | — |  |  | 5,759 |  |  | 840 |
Proceeds from disposal of business | — |  |  | — |  |  | 1,027 |
Cash paid for acquisitions, net of cash acquired | — |  |  | (10,545) |  |  | (100,472) |
Net cash used in investing activities | $ | (13,081) |  |  | $ | (14,970) |  |  | $ | (109,522) |
Financing activities |  |  |  |  |
Proceeds from Term Loan A | $ | 125,000 |  |  | $ | — |  |  | $ | 100,000 |
Payments on Term Loan A | (142,000) |  |  | (28,625) |  |  | (30,872) |
Proceeds from revolving credit facility | 36,711 |  |  | 12,000 |  |  | 18,000 |
Payments on revolving credit facility | (17,011) |  |  | (17,000) |  |  | (27,500) |
Issuance costs associated with debt financing | (523) |  |  | — |  |  | (759) |
Lease financing | (59) |  |  | (58) |  |  | (28) |
Issuance of common stock including exercise of stock options | 72 |  |  | 632 |  |  | — |
Repurchase of employee stock units on vesting | (3,732) |  |  | (3,230) |  |  | (2,058) |
Repurchase of treasury shares under authorized program | (15,774) |  |  | (20,138) |  |  | (250) |
Net cash provided by/ (used in) financing activities | $ | (17,316) |  |  | $ | (56,419) |  |  | $ | 56,533 |
Effect of exchange rate changes on cash and cash equivalents | 29 |  |  | (738) |  |  | (1,055) |
Change in cash and cash equivalents | $ | 16,427 |  |  | $ | (9,009) |  |  | $ | 11,911 |
Cash, cash equivalents and restricted cash at beginning of period | 41,422 |  |  | 50,431 |  |  | 38,520 |
Cash, cash equivalents and restricted cash at end of period | $ | 57,849 |  |  | $ | 41,422 |  |  | $ | 50,431 |
Supplemental cash flow information: |  |  |  |  |
Interest paid | $ | 8,543 |  |  | $ | 10,405 |  |  | $ | 9,178 |
Income taxes paid | 18,189 |  |  | 16,498 |  |  | 23,130 |
Income tax refunds received | 189 |  |  | 1,497 |  |  | 2,829 |
Purchases of property, plant and equipment in accounts payable | 1,269 |  |  | 311 |  |  | 654 |

The accompanying notes are an integral part of these consolidated financial statements.
44

Thermon Group Holdings, Inc.
Notes to Consolidated Financial Statements
(Dollars in thousands, except share and per share data)
Years Ended March 31, 2026, 2025 and 2024

1. Organization and Summary of Significant Accounting Policies
Organization
Thermon Group Holdings, Inc. and its direct and indirect subsidiaries are referred to collectively as "we," "our," "us," the "Company," or "Thermon" herein. We are one of the largest providers of highly engineered industrial process heating solutions for process industries. For over 70 years, we have served a diverse base of thousands of customers around the world in attractive and growing markets, including general industrial, chemical and petrochemical, oil, gas, power generation, commercial, food and beverage, rail and transit, and other, which we refer to as our "key end markets."
Basis of Consolidation and Presentation
Our consolidated financial statements are prepared in conformity with generally accepted accounting principles in the United States ("GAAP"). The consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries and entities in which the Company has a controlling financial interest. All intercompany balances have been eliminated in consolidation. Consolidated subsidiaries domiciled in foreign countries comprised approximately 51%, 49% and 51% of the Company's consolidated sales for fiscal 2026, 2025 and 2024, respectively, and 47% and 47% of the Company's consolidated total assets at March 31, 2026 and 2025, respectively. In our opinion, the accompanying consolidated financial statements present fairly our financial position at March 31, 2026 and 2025, and the results of operations for the years ended March 31, 2026, 2025, and 2024. Certain prior year balances have been reclassified to conform with current presentation.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes, including estimates such as those related to contract assets and liabilities, income taxes, and goodwill impairment, among others. Actual results may differ from those estimates and such differences may be material to the financial statements.
Cash Equivalents
Cash and cash equivalents consist of cash in bank and money market funds. All highly liquid investments purchased with original maturities of three months or less are considered to be cash equivalents.
Restricted Cash
The Company maintains certain restricted cash balances which are included in prepaid expenses and other current assets and represent amounts required to be set aside by a contractual agreement, which generally contain cash deposits pledged as collateral on bank guarantees, or is otherwise required to be restricted for standby letters of credit. The following table provides a reconciliation of cash, cash equivalents, restricted cash included in prepaid expenses and other current assets and restricted cash included in other non-current assets reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the statement of cash flows.

| March 31, 2026 |  | March 31, 2025 |  | March 31, 2024
Cash and cash equivalents | $ | 52,275 |  |  | $ | 39,537 |  |  | $ | 48,631 |
Restricted cash included in prepaid expenses and other current assets | 5,574 |  |  | 1,885 |  |  | 1,800 |
Total cash, cash equivalents, and restricted cash shown in the statement of cash flows | $ | 57,849 |  |  | $ | 41,422 |  |  | $ | 50,431 |

Of the total restricted cash balance, $1,417, $789, and $518 related to outstanding bank guarantees at March 31, 2026, 2025, and 2024, respectively.
Accounts Receivable and Concentration of Credit Risk
The Company's receivables are recorded at cost when earned and represent claims against third parties that will be settled in cash. The carrying value of the Company's receivables is net of allowance for credit losses. If events or changes in circumstances indicate specific receivable balances might be impaired, further consideration is given to the Company's ability to collect those balances and the allowance is adjusted accordingly. The Company has established an allowance for credit losses
45

based upon an analysis of aged receivables as well as specific reserves for certain accounts. Past due receivable balances are written off when the Company's internal collection efforts have been unsuccessful in collecting the amounts due.
The Company's primary base of customers operates in the general industrial, chemical and petrochemical, oil, gas, power generation, commercial, food and beverage, rail and transit, and other industries. Historically, we have not experienced significant collection losses on sales to these customers. The Company's receivables are not concentrated within any one geographic segment nor are they subject to any current economic conditions that would subject the Company to unusual risk. At March 31, 2026 and 2025, no one customer represented more than 10% of the Company's accounts receivable balance.
At March 31, 2026 and 2025, we had $3,637 and $4,422, respectively, of balances billed but not paid by customers under retention provisions of our contracts. Retention balances typically represent hold backs against project completion.
The Company performs credit evaluations of new customers and sometimes requires deposits, prepayments or use of trade letters of credit to mitigate our credit risk. Allowance for credit losses was $1,355 and $1,230 as of March 31, 2026 and 2025, respectively. Although we have fully provided for these balances, we continue to pursue collection of these receivables.
The following table summarizes the annual changes in our allowance for credit losses:

Balance at March 31, 2024 | $ | 1,428 |
| Additions to reserve | 819 |
| Write-off of uncollectible accounts | (1,017) |
Balance at March 31, 2025 | $ | 1,230 |
| Additions to reserve | 415 |
| Write-off of uncollectible accounts | (290) |
Balance at March 31, 2026 | $ | 1,355 |

Inventories
Inventories, principally raw materials and finished goods, are valued at the lower of cost or net realizable value. Our finished goods inventory consists primarily of completed electrical cable that has been manufactured for various heat tracing solutions, as well as various types of immersion, circulation and space heaters for our process heating business. Most of our manufactured product offerings are built to industry standard specifications that have general purpose applications and therefore are sold to a variety of customers in various industries. Some of our products, such as custom orders and ancillary components outsourced from third-party manufacturers, have more specific applications and therefore may be at a higher risk of inventory obsolescence. We determine the inventory valuation reserves based on recent actual usage history. In cases where we are aware of changes needed in the valuation of a certain item, a specific reserve is recorded to reduce the item to its estimated net realizable value using an estimate of expected sales price less any disposal costs.
Cloud Computing Arrangements
The Company capitalizes implementation costs associated with its Cloud Computing Arrangements (“CCA”) consistent with costs capitalized for internal-use software. The CCA costs are amortized over the term of the related hosting agreement, taking into consideration renewal options, if any. The renewal period is included in the amortization period if determined that the option is reasonably certain to be exercised. The amortization expense is recorded within selling, general, and administrative expenses in the Company's consolidated statements of operations and comprehensive income, which is within the same line item as the related hosting fees. The balance of the unamortized CCA implementation costs totaled $12,784 and $8,250 as of March 31, 2026 and 2025, respectively. Of this total, $2,209 and $1,206 was recorded within prepaid expenses and other current assets and $10,575 and $7,044 was recorded within other non-current assets on the Company's consolidated balance sheets as of March 31, 2026 and 2025, respectively. The CCA implementation costs are recorded within operating activities in the Company's consolidated statements of cash flows.
Property, Plant and Equipment
Property, plant and equipment are stated at historical cost, less related accumulated depreciation and amortization. Expenditures for renewals and improvements that significantly extend the useful life of an asset are capitalized. Expenditures for maintenance and repairs of assets are charged to operations as incurred. When assets are sold or retired, the cost and accumulated depreciation are removed from the accounts and any gain or loss is credited or charged to operations.
Depreciation is computed using the straight-line method over the following useful lives:
46

| Years
Buildings and improvements | 10 | - | 30
Machinery and equipment | 3 | - | 25
Office furniture and equipment | 3 | - | 10
Internally developed software | 5 | - | 7

Long-Lived Assets
The Company evaluates its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of these assets is measured by comparison of the carrying amounts to the future undiscounted cash flows that the assets are expected to generate. If the long-lived assets are considered impaired, the impairment to be recognized equals the amount by which the carrying value of the asset exceeds the estimated fair value and is recorded in the period the determination was made.
The Company determined no impairment of long-lived assets existed in fiscal 2026, 2025, or 2024.
Goodwill and Other Intangible Assets
Goodwill represents the excess of cost of an acquired business over the fair value of the identifiable tangible and intangible assets acquired and liabilities assumed in a business combination. We conduct a required annual review of goodwill for potential impairment in the fourth quarter, or sooner if events or changes in circumstances indicate that the fair value of a reporting unit is below its carrying value. Our reporting units are our operating segments.
We have the option to perform a qualitative assessment to satisfy the annual test requirement if we believe that it is more likely than not that we do not have an impairment in any one of our reporting units. Otherwise, we perform a full quantitative assessment. For a full quantitative assessment, if the carrying value of a reporting unit that includes goodwill exceeds its fair value, which is determined using both the income approach and market approach, goodwill is considered impaired. The income approach determines fair value based on a discounted cash flow model derived from a reporting unit’s long-term forecasted cash flows. The market approach determines fair value based on the application of earnings multiples of comparable companies to projected earnings of the reporting unit. The amount of impairment loss is measured as the difference between the carrying value and the fair value of a reporting unit but is limited to the total amount of goodwill allocated to the reporting unit. In performing the fair value analysis, management makes various judgments, estimates and assumptions, the most significant of which are the assumptions related to revenue growth rates and discount rates.
In fiscal 2026, we elected to test our goodwill and other intangible assets for impairment using the qualitative method.
We believe that the estimates and assumptions used in our impairment assessment are reasonable; however, these assumptions are judgmental and variations in any assumptions could result in materially different calculations of fair value. We will continue to evaluate goodwill on an annual basis in our fourth quarter, and whenever events or changes in circumstances, such as significant adverse changes in operating results, market conditions, or changes in management’s business strategy indicate that there may be a probable indicator of impairment. It is possible that the assumptions used by management related to the evaluation may change or that actual results may vary significantly from management’s estimates. In fiscal 2026, 2025 and 2024, the Company determined that no impairment of goodwill existed.
Other intangible assets include indefinite lived intangible assets for which we must also perform an annual test of impairment. The Company's indefinite-lived intangible assets consist primarily of trademarks. If a full quantitative assessment is warranted, the fair value of the Company's trademarks is calculated using a "relief from royalty payments" methodology. This approach involves first estimating reasonable royalty rates for each trademark then applying these royalty rates to a net sales stream and discounting the resulting cash flows to determine the fair value. The royalty rate is estimated using both a market and income approach. The market approach relies on the existence of identifiable transactions in the marketplace involving the licensing of trademarks similar to those owned by the Company. The income approach uses a projected pretax profitability rate relevant to the licensed income stream. We believe the use of multiple valuation techniques results in a more accurate indicator of the fair value of each trademark. This fair value is then compared with the carrying value of each trademark. In fiscal 2026, we performed a qualitative assessment. The results of this test during the fourth quarter of our fiscal year indicated that there was no impairment of our indefinite life intangible assets during fiscal 2026, 2025 or 2024.
Business Combinations
Accounting for business combinations requires, among other things, the acquiring entity in a business combination to recognize the fair value of the assets acquired and liabilities assumed. We use qualified third-party valuation specialists to assist management in determining the fair value of assets acquired and liabilities assumed. The purchase price allocation process
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allows us to refine these estimates over a measurement period not to exceed one year to reflect new information obtained surrounding facts and circumstances existing at the acquisition date.
The fair value assigned to identifiable intangible assets acquired is determined primarily by using an income approach, which is based on assumptions and estimates made by management. Significant assumptions utilized in the income approach are the attrition rate, revenue growth rates, earnings before interest, taxes, depreciation and amortization, ("EBITDA") margins, royalty rates, and the discount rate. Some of these assumptions are based on company-specific information and projections, which are not observable in the market and are therefore considered Level 3 measurements. The excess of the purchase price over the fair value of the identified assets and liabilities is recorded as goodwill. Operating results of the acquired entity are reflected within the consolidated financial statements from the date of acquisition. Refer to Note 2, "Acquisition" for more information.
Revenue Recognition
The core principle of the revenue recognition standard, ASC 606, Revenue from Contracts with Customers ("ASC 606"), is to recognize revenue that reflects the consideration the Company expects to receive for goods or services when or as the promised goods or services are transferred to customers. Management performs the following five steps when applying the revenue recognition standard: (i) identify each contract with customers, (ii) identify each performance obligation in the contracts with customers, (iii) estimate the transaction price (including any variable consideration), (iv) allocate the transaction price to each performance obligation and (v) recognize revenue as each performance obligation is satisfied.
Description of Product and Service Offerings and Revenue Recognition Policies
We provide (i) a suite of products, including heating units, heating cables, tubing bundles, control systems including customized software solutions, environmental heating solutions, process heating solutions, temporary heating and lighting, filtration, transportation products, boilers, heating blankets, and temporary power products, and (ii) services, including design optimization, engineering, installation and maintenance services required to deliver comprehensive solutions to complex projects. The performance obligations associated with our product sales are generally recognized at a point in time. Where products and services are provided together under a time and materials contract, the performance obligations are satisfied over time. We also provide fixed-fee solutions consisting of products and services under which the related performance obligations are satisfied over time.
Revenue is recognized when control of the promised goods or services is transferred to our customers in an amount that reflects the consideration we expect to be entitled to receive in exchange for transferring such goods or providing such services. We account for a contract when a customer provides us with a purchase order or other contract that identifies the goods or services to be provided, the payment terms for those services, and when collectability of the consideration due is probable. Generally, our payment terms do not exceed 30 days for product sales, while terms for our time and materials and fixed-price contracts can vary based on milestones or other key deliverable-based increments. Please refer to Note 5, "Revenue from Contracts with Customers" for additional information.
As mentioned above, we often agree to provide products and services under fixed-price contracts, including our turnkey solutions. These contracts require management to make significant estimates around the total costs to complete the work. Furthermore, under these contracts, we are typically responsible for all cost overruns, other than the amount of any cost overruns resulting from customer requested changes in order specifications. Our actual costs and any gross profit realized on these fixed-price contracts could vary from the estimated costs on which these contracts were originally based. This may occur for various reasons, including changes in estimates or bidding, changes in availability and cost of labor and raw materials and unforeseen technical and logistical challenges, including managing our geographically widespread operations and use of third party subcontractors, suppliers and manufacturers in many countries. These variations and the risks inherent in our projects may result in reduced profitability or losses. Refer to Note 5, "Revenue from Contracts with Customers" for further information.
Shipping and Handling Cost
The Company includes shipping and handling as part of cost of sales and freight due from customers is recorded as a component of sales.
Stock-Based Compensation
We account for share-based payments to employees in accordance with ASC Topic 718, Compensation-Stock Compensation ("ASC 718"), which requires that share-based payments (to the extent they are compensatory) be recognized in our consolidated statements of operations and comprehensive income based on their fair values.
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As required by ASC 718, we recognize stock-based compensation expense for share-based payments that are expected to vest. In determining whether an award is expected to vest, we generally account for forfeitures as they occur, rather than estimate expected forfeitures.
We are also required to determine the fair value of stock-based awards at the grant date. For option awards that are subject to service conditions and/or performance conditions, we estimate the fair values of employee stock options using a Black-Scholes-Merton valuation model. Some of our option grants and awards included a market condition for which we used a Monte Carlo pricing model to establish grant date fair value. These determinations require judgment, including estimating expected volatility. If actual results differ significantly from these estimates, stock-based compensation expense and our results of operations could be impacted. Refer to Note 15, "Stock-Based Compensation" for more information.
Warranties
The Company offers a standard warranty on product sales. Specifically, we will repair or replace any defective product within one year from the date of purchase. Warranties on projects are negotiated individually, are typically one year to 18 months in duration, and may include the cost of labor to repair or replace products. Factors that affect the Company's warranty liability include the amount of sales, historical and anticipated rates of warranty claims, and cost per claim. The Company regularly assesses the adequacy of its recorded warranty liabilities and adjusts the amounts as necessary.
Research and Development
Research and development expenditures are expensed when incurred and are included in selling, general and administrative expenses in our consolidated statements of operations and comprehensive income. Research and development expenses include salaries, direct material costs incurred, plus building and other overhead expenses. The amounts expensed for fiscal 2026, 2025 and 2024 were $9,511, $9,408 and $9,799, respectively.
Loss Contingencies
We accrue for probable losses from contingencies on an undiscounted basis when such costs are considered probable of being incurred and are reasonably estimable. Legal expenses related to such matters are expensed as incurred. We regularly evaluate available information, both internal and external, relative to such contingencies and adjust this accrual as necessary. Disclosure of a contingency is required if there is at least a reasonable possibility that a material loss may have been incurred. In determining whether a loss should be accrued, we evaluate, among other factors, the degree of probability of an unfavorable outcome and the ability to make a reasonable estimate of the amount of loss.
Income Taxes
We account for income taxes under the asset and liability method that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in our financial statements or tax returns. Judgment is required in assessing the future tax consequences of events that have been recognized in our financial statements or tax returns. Variations in the actual outcome of these future tax consequences could materially impact our financial position, results of operations or effective tax rate.
In the ordinary course of a global business, there are many transactions and calculations where the ultimate tax outcome is uncertain. Some of these uncertainties arise as a consequence of revenue sharing and cost reimbursement arrangements among related entities, the process of identifying items of revenue and expense that qualify for preferential tax treatment, and segregation of foreign and domestic earnings and expenses to avoid double taxation. Although we believe that our estimates are reasonable, the final tax outcome of these matters could be different from that which is reflected in our historical income tax provisions and accruals. Such differences could have a material effect on our income tax provision and net income in the period in which such determination is made.
In estimating future tax consequences, all expected future events are considered other than enactments of changes in tax laws or rates. Valuation allowances are established when necessary to reduce deferred tax assets to amounts which are more likely than not to be realized. We consider future growth, forecasted earnings, future taxable income, the mix of earnings in the jurisdictions in which we operate, historical earnings, taxable income in prior years, if carryback is permitted under the law, and prudent and feasible tax planning strategies in determining the need for a valuation allowance. In the event we were to determine that we would not be able to realize all or part of our net deferred tax assets in the future, an adjustment to the deferred tax assets valuation allowance would be charged to earnings in the period in which we make such a determination, or goodwill would be adjusted at our final determination of the valuation allowance related to an acquisition within the measurement period. If we later determine that it is more likely than not that the net deferred tax assets would be realized, we would reverse the applicable portion of the previously provided valuation allowance as an adjustment to earnings at such time. The amount of income tax we pay is subject to ongoing audits by federal, state and foreign tax authorities, which often result in proposed assessments. We account for these uncertain tax positions pursuant to ASC 740, Income Taxes, which contains a two-step approach to recognizing and measuring uncertain tax positions taken or expected to be taken in a tax return. The first step
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is to determine if the weight of available evidence indicates that it is more likely than not that the tax position will be sustained on audit, including resolution of any related appeals or litigation processes. The second step is to measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement. Although we believe we have adequately reserved for our uncertain tax positions, no assurance can be given with respect to the final outcome of these matters. We adjust reserves for our uncertain tax positions due to changing facts and circumstances, such as the closing of a tax audit, judicial rulings, refinement of estimates or realization of earnings or deductions that differ from our estimates. To the extent that the final outcome of these matters is different from the amounts recorded, such differences generally will impact our provision for income taxes in the period in which such a determination is made. Our provisions for income taxes include the impact of reserve provisions and changes to reserves that are considered appropriate and also include the related interest and penalties.
Foreign Currency Transactions and Translation
Exchange rate gains and losses that result from foreign currency transactions are recognized in income as they are realized. For the Company's non-U.S. dollar functional currency subsidiaries, assets and liabilities of foreign subsidiaries are translated into U.S. dollars using year-end exchange rates. Income and expense items are translated at weighted average exchange rates prevailing during the year. Adjustments resulting from translation of financial statements are reflected as a separate component of stockholders' equity.
Recent Accounting Pronouncements
Income taxes - In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-09, Improvements to Income Tax Disclosures. ASU 2023-09 enhances annual income tax disclosures to address investor requests for more information about the tax risks and opportunities present in an entity’s worldwide operations. The two primary enhancements disaggregate existing income tax disclosures related to the effective tax rate reconciliation and income taxes paid. We implemented ASU 2023-09 in fiscal 2026 for our annual report on Form 10-K. The adoption of this ASU did not materially impact our consolidated financial statements.
Income statement expenses - In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses, which is intended to enhance disclosures regarding significant expenses. The purpose of the amendment is to provide readers of the financial statements with information to better understand an entity’s overall performance, assess potential future cash flows, and compare an entity's performance over time and with that of other entities. The guidance is effective in our fiscal year ending March 31, 2028 for our annual report on Form 10-K. We are currently evaluating the potential impact of adopting this new guidance on our Consolidated Financial Statements and related disclosures.
2. Acquisition
F.A.T.I.
On October 2, 2024, we acquired Fabbrica Apparecchiature Termoelettriche Industriali – F.A.T.I. – S.r.l. ("F.A.T.I.") (the "F.A.T.I. Acquisition"). F.A.T.I., based in Italy, is a leading designer and manufacturer of electrical heaters and heating systems for a broad range of industrial end markets, including oil and gas, pharmaceutical, renewables, nuclear and HVAC. Since its founding nearly 80 years ago, F.A.T.I. has built a high-quality portfolio of technologically advanced and reliable solutions for the industrial electric heating market that are available in over 30 countries around the globe. In fiscal 2026, F.A.T.I. contributed $26,375 in Sales and $3,597 in Net income to our consolidated operating results.
The initial purchase price was €12,500, or approximately $13,807, with cash acquired of $2,278, for a net closing purchase price of $11,529. In fiscal 2025, we adjusted the purchase price for excess cash acquired to €13,339, or approximately $14,733. The initial purchase price was funded with cash on hand, and includes F.A.T.I.'s manufacturing facility in Milan, which enhances our global production capabilities. We have integrated F.A.T.I. into our Europe, Middle East, and Africa ("EMEA") reportable segment.
Purchase Price Allocation
We have accounted for the F.A.T.I. Acquisition according to the business combinations guidance found in ASC 805, Business Combinations, henceforth referred to as acquisition accounting. We used Level 2 and 3 inputs to allocate the purchase price to the major categories of assets and liabilities shown below. For valuing the customer relationships intangible asset, we used a common income-based approach called the multi-period excess earnings method; for the trademarks and developed technology intangible assets, we used a relief-from-royalty method; and for the contract-based intangible asset, we used the with and without method. The carrying values of the assets and liabilities shown below approximated their respective fair values at the time of closing.
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Purchase Price Allocation - F.A.T.I.
| Amortization Period (years) | Fair Value
Cash |  | $ | 2,278 |
Accounts receivable |  | 2,088 |
Inventories |  | 3,434 |
Other current assets |  | 1,113 |
Property, plant and equipment |  | 7,580 |
Intangibles: |  |
Customer relationships | 10 | 1,776 |
Trademarks | 5 | 502 |
Developed technology | 15 | 1,909 |
Goodwill(1) |  | 2,447 |
Total fair value of assets acquired |  | $ | 23,127 |
Current and non-current liabilities |  | (8,394) |
Total fair value of liabilities acquired |  | $ | (8,394) |
Total purchase price |  | $ | 14,733 |

(1) The goodwill related to the F.A.T.I. Acquisition is not deductible for tax purposes.
Unaudited Pro Forma Financial Information
The following unaudited pro forma results of operations assume that the acquisition mentioned above occurred at the beginning of the periods presented. These unaudited pro forma results are presented for informational purposes only and are not necessarily indicative of what the actual results of operations would have been if the acquisition had occurred at the beginning of the periods presented, nor are they indicative of future results of operations. The pro forma results presented below are adjusted for the removal of transaction related costs of zero, $253, and zero in the fiscal years ended March 31, 2026, 2025, and 2024, respectively.

in thousands, unaudited | Twelve Months Ended March 31, 2026 |  | Twelve Months Ended March 31, 2025 |  | Twelve Months Ended March 31, 2024
Sales | $ | 536,263 |  |  | $ | 504,223 |  |  | $ | 507,229 |
Net income | 44,571 |  |  | 53,461 |  |  | 51,986 |

3. Fair Value Measurements
We measure fair value based on authoritative accounting guidance, which defines fair value, establishes a framework for measuring fair value and expands on required disclosures regarding fair value measurements.
Inputs are referred to as assumptions that market participants would use in pricing the asset or liability. The use of inputs in the valuation process is categorized into a three-level fair value hierarchy.
•Level 1 — uses quoted prices in active markets for identical assets or liabilities we have the ability to access.
•Level 2 — uses observable inputs other than quoted prices in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
•Level 3 — uses one or more significant inputs that are unobservable and supported by little or no market activity, and that reflect the use of significant management judgment.
Financial assets and liabilities with carrying amounts approximating fair value include cash, trade accounts receivable, accounts payable, accrued expenses and other current liabilities. The carrying amount of these financial assets and liabilities approximates fair value because of their short maturities. At March 31, 2026 and 2025, no assets or liabilities were valued using Level 3 criteria, except as described in Note 2, "Acquisition."
Information about our financial assets and liabilities measured at fair value are as follows (our outstanding principal amount of the senior secured facility is reported at carrying value):
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| March 31, 2026 |  | March 31, 2025 |  |
| Carrying Value |  | Fair Value |  | Carrying Value |  | Fair Value |  | Valuation Technique
Financial Assets: |  |  |  |  |  |  |  |  |
Deferred compensation plan assets | $ | 9,020 |  |  | $ | 9,020 |  |  | $ | 8,206 |  |  | $ | 8,206 |  |  | Level 1 - Market Approach
Foreign currency contract forwards assets | — |  |  | — |  |  | 1 |  |  | 1 |  |  | Level 2 - Market Approach
Financial Liabilities: |  |  |  |  |  |  |  |  |
Outstanding principal amount of senior secured credit facility | $ | 121,875 |  |  | $ | 121,266 |  |  | $ | 138,874 |  |  | $ | 138,180 |  |  | Level 2 - Market Approach
Deferred compensation plan liabilities | 8,831 |  |  | 8,831 |  |  | 8,030 |  |  | 8,030 |  |  | Level 1 - Market Approach
Foreign currency contract forwards liabilities | 209 |  |  | 209 |  |  | 491 |  |  | 491 |  |  | Level 2 - Market Approach
Outstanding borrowings from revolving line of credit | 19,700 |  |  | 19,700 |  |  | — |  |  | — |  |  | Level 2 - Market Approach

Long-term Debt
At March 31, 2026 and 2025, the fair value of our long-term debt is based on market quotes available for issuance of debt with similar terms. As the quoted price is only available for similar financial assets, the Company concluded the pricing is indirectly observable through dealers and has been classified as Level 2.
Deferred Compensation Plan Assets
The Company provides a non-qualified deferred compensation plan for certain highly compensated employees where payroll contributions are made by the employees on a pre-tax basis. Deferred compensation plan assets (mutual funds) are measured at fair value on a recurring basis based on quoted market prices in active markets (Level 1). Please refer to Note 13, "Employee Benefits" for further discussion.
Foreign Currency Forward Contracts
We transact business in various foreign currencies and have established a program that primarily utilizes foreign currency forward contracts to address the risk associated with fluctuations of certain foreign currencies. Under this program, increases or decreases in our foreign currency exposures are offset by gains or losses on the forward contracts to mitigate foreign currency transaction gains or losses. These foreign currency exposures typically arise from intercompany transactions. Our forward contracts generally have terms of 30 days. We do not use forward contracts for trading purposes or designate these forward contracts as hedging instruments pursuant to ASC 815, Derivatives and Hedging. We adjust the carrying amount of all contracts to their fair value at the end of each reporting period and unrealized gains and losses are included in our results of operations for that period. These gains and losses are intended to offset gains and losses resulting from settlement of payments received from our foreign operations which are settled in U.S. dollars. All outstanding foreign currency forward contracts are marked to market at the end of the period with unrealized gains and losses included in other expense. The fair value is determined by quoted prices from active foreign currency markets (Level 2). The consolidated balance sheets reflect unrealized gains within accounts receivable, net and unrealized losses within accrued liabilities. Our ultimate realized gain or loss with respect to currency fluctuations will depend on the currency exchange rates and other factors in effect as the contracts mature. As of March 31, 2026 and 2025, the notional amounts of forward contracts as well as the related fair values were as follows:

| March 31, 2026 |  | March 31, 2025
Euro | 10,353 |  |  | 10,280 |
Canadian Dollar | — |  |  | 2,000 |
South Korean Won | — |  |  | 2,500 |
Mexican Peso | — |  |  | 2,000 |
Total notional amounts | $ | 10,353 |  |  | $ | 16,780 |

Recognized foreign currency gains or losses related to our forward contracts in the accompanying consolidated statements of operations and comprehensive income were gains/(losses) of $(75), $(563) and $243 for fiscal 2026, 2025 and 2024, respectively. Gains and losses from our forward contracts are intended to be offset by transaction gains and losses from the settlement of transactions denominated in foreign currencies. The Company realized net foreign currency gains/(losses) of
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$(707), $74, and $(205) for fiscal 2026, 2025, and 2024, respectively. Foreign currency gains and losses are recorded within other income/(expense) in our consolidated statements of operations and comprehensive income.
4. Leases
Description of Leases
The significant majority of our lease obligations are for real property. We lease numerous facilities relating to our operations, primarily for office, manufacturing and warehouse facilities, as well as, from time to time, both long-term and short-term employee housing. Leases for real property have terms ranging from month-to-month to ten years. We also lease various types of equipment, including vehicles, office equipment (such as copiers and postage machines), heavy warehouse equipment (such as forklifts), heavy construction equipment (such as cranes), medium and light construction equipment used for customer project needs (such as pipe threading machines) and mobile offices and other general equipment that is normally associated with an office environment. Equipment leases generally have terms ranging from six months to five years.
Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. We do not have any significant leases that have not yet commenced but that create significant rights and obligations for us.
We lease temporary power products produced by our Thermon Power Solutions Inc. (“TPS”) division to our customers on a short-term basis. Lease contracts associated with such rental of the temporary power products have historically been month-to-month contracts without purchase options. No lease contracts in which the Company was the lessor have had an initial term in excess of one year. We recognized revenue of $9,408, $7,197, and $8,674 in fiscal 2026, 2025, and 2024, respectively related to our rental business, which we include within our over time revenue for disaggregation purposes.
Variable Lease Payments
The majority of our lease agreements include fixed rental payments. A small number of our lease agreements include fixed rental payments that are adjusted periodically for changes in the Consumer Price Index (“CPI”). Payments based on an index or rate such as CPI are included in the lease payments based on the commencement date index or rate. Estimated changes to the index or rate during the lease term are not considered in the determination of the lease payments.
Options to Extend or Terminate Leases
Most of our real property leases include early termination options and/or one or more options to renew, with renewal terms that can extend the lease term for an additional one to five years or longer. The exercise of lease termination and renewal options is at our sole discretion. If it is reasonably certain that we will exercise such renewal options, the periods covered by such renewal options are included in the lease term and are recognized as part of our Right of Use ("ROU") assets and lease liabilities. Certain leases also include options to purchase the leased property. The depreciable life of assets and leasehold improvements are limited by the expected lease term unless there is a transfer of title or purchase option reasonably certain of exercise.
Discount Rate
The Company's leases generally do not provide an implicit rate, and therefore the Company uses its incremental borrowing rate as the discount rate when measuring operating lease liabilities. The incremental borrowing rate represents an estimate of the interest rate the Company would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the term of a lease within a particular currency environment. A large concentration of the Company's operating lease liabilities are attributed to our US-LAM operations. Our EMEA operations and Asia Pacific ("APAC") operations have limited borrowing needs and rely on cash from operations. However, the U.S. operating subsidiary can make intercompany loans if necessary from its available credit capacity given the more preferential rates available to our U.S. operating subsidiary and the ease with which funds can be drawn from the debt facilities already established within the U.S. Considering this, the Company has utilized its U.S. credit facility rate as the worldwide incremental borrowing rate. During the fiscal year ended March 31, 2026, rates applicable at or close to the time of the inception of the lease were used to establish the new lease liabilities.
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Lease Term and Discount Rate |  | March 31, 2026 |  | March 31, 2025
Weighted average remaining lease term (in years): |  |  |  |
Operating |  | 4.3 |  | 4.4
Finance |  | 2.9 |  | 4.8
Weighted average discount rate: |  |  |  |
Operating |  | 4.30 | % |  | 4.29 | %
Finance |  | 10.11 | % |  | 4.27 | %

Supplemental balance sheet information related to leases was as follows:

Assets |  | Classification |  | March 31, 2026 |  | March 31, 2025 |  |
Operating |  | Operating lease right-of-use assets |  | $ | 14,783 |  |  | $ | 11,192 |  |  |
Finance |  | Property, plant and equipment |  | 776 |  |  | 545 |  |  |
Total right-of-use assets |  |  |  | $ | 15,559 |  |  | $ | 11,737 |  |  |
Liabilities |  |  |  |  |  |  |  |
Current: |  |  |  |  |  |  |  |
Operating |  | Lease liabilities |  | $ | 4,473 |  |  | $ | 3,793 |  |  |
Finance |  | Lease liabilities |  | 228 |  |  | 230 |  |  |
Non-current: |  |  |  |  |  |  |  |
Operating |  | Non-current lease liabilities |  | 11,597 |  |  | 8,931 |  |  |
Finance |  | Non-current lease liabilities |  | 502 |  |  | 368 |  |  |
Total lease liabilities |  |  |  | $ | 16,800 |  |  | $ | 13,322 |  |  |

Supplemental statement of operations information related to leases was as follows:

Lease expense |  | Classification |  |  |  | Year-Ended March 31, 2026 |  | Year-Ended March 31, 2025 |  | Year-Ended March 31, 2024
Operating lease expense |  | Selling, general, and administrative expenses |  |  |  | $ | 4,709 |  |  | $ | 4,239 |  |  | $ | 3,953 |
Finance lease expense: |  |  |  |  |  |  |  |  |  |
Amortization of ROU assets |  | Selling, general, and administrative expenses |  |  |  | 194 |  |  | 165 |  | 149
Interest expense on finance lease liabilities |  | Interest expense |  |  |  | 59 |  |  | 58 |  | 28
Short-term lease expense |  | Selling, general, and administrative expenses |  |  |  | 175 |  |  | 14 |  |  | 2 |
Net lease expense |  |  |  |  |  | $ | 5,137 |  |  | $ | 4,476 |  |  | $ | 4,132 |

Supplemental statement of cash flows information related to leases was as follows:

Cash paid for amounts included in the measurement of lease liabilities |  | Year-Ended March 31, 2026 |  | Year-Ended March 31, 2025 |  | Year-Ended March 31, 2024
Operating cash used for operating leases |  | $ | 5,211 |  |  | $ | 4,574 |  |  | $ | 4,231 |
Operating cash flows used for finance leases |  | 194 |  |  | 165 |  |  | 149 |
Financing cash flows used for finance leases |  | 59 |  |  | 58 |  |  | 28 |

Future lease payments under non-cancelable leases as of March 31, 2026 were as follows:
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Future Lease Payments |  | Operating Leases |  | Finance Leases
Twelve months ending March 31, |  |  |  |
2027 |  | $ | 5,007 |  |  | $ | 292 |
2028 |  | 4,031 |  |  | 292 |
2029 |  | 3,816 |  |  | 203 |
2030 |  | 1,676 |  |  | 62 |
2031 |  | 1,184 |  |  | — |
Thereafter |  | 1,720 |  |  | — |
Total lease payments |  | $ | 17,434 |  |  | $ | 849 |
Less imputed interest |  | (1,364) |  |  | (119) |
Total lease liability |  | $ | 16,070 |  |  | $ | 730 |

5. Revenue from Contracts with Customers
Please refer to Note 1, "Organization and Summary of Significant Accounting Policies" for more information regarding our revenue recognition policy.
Performance Obligations
A performance obligation is a promise to provide the customer with a good or service. At contract inception, the Company will assess the goods or services promised in the contract with a customer and shall identify, as a performance obligation, each promise to transfer to the customer either: (i) a good or service (or a bundle of goods or services) or (ii) a series of distinct goods or services that are substantially the same and that have the same pattern of transfer to the customer. For contracts with multiple performance obligations, standalone selling price is generally readily observable.
Revenue from products transferred to customers at a point in time is recognized when obligations under the terms of the contract with the customer are satisfied; generally this occurs with the transfer of control upon shipment. Revenue from products transferred to customers at a point in time accounted for approximately 70.0%, 70.9% and 60.8% of total revenue for the fiscal year ended March 31, 2026, 2025, and 2024, respectively.
Our revenues that are recognized over time include generally (i) products and services which are billed on a time and materials basis, and (ii) fixed fee contracts for complex engineered solutions. Revenue from products and services transferred to customers over time accounted for approximately 30.0%, 29.1% and 39.2% of total revenue for the fiscal years ended March 31, 2026, 2025, and 2024, respectively.
For our time and materials service contracts, we recognize revenues as the products and services are provided over the term of the contract.
Our engineered solutions, or fixed fee projects, offer our customers a comprehensive solution that can include engineering, design, installation, commissioning, and/or acceptance testing. Engineered solutions may also include project planning, product supply, system integration, and ongoing maintenance. Engineered solutions containing multiple deliverables are considered a combined performance obligation as they provide a comprehensive solution to the customer. Revenue is recognized over-time as work progresses for engineered solutions constructed at a customer’s site that create or enhance an asset controlled by the customer. For engineered solutions constructed at the Company’s facilities, revenue is recognized over-time when an asset is created without an alternative use and the contract contains an enforceable right to payment for work completed to date. When engineered solutions create an asset with an alternative use or the Company does not have an enforceable right to payment, revenue is recognized at a point-in-time when control of the asset is transferred to the customer.
For revenue recognized over-time under fixed fee contracts, we measure the costs incurred that contribute towards the satisfaction of our performance obligation as a percentage of the total cost of production (the “cost-to-cost method”), and we recognize a proportionate amount of contract revenue, as the cost-to-cost method appropriately depicts performance towards satisfaction of the performance obligation. Changes to the original cost amount may be required during the life of the contract and such estimates are reviewed on a regular basis. Sales and gross profits are adjusted using the cumulative catch-up method for revisions in estimated contract costs. Reviews of estimates have not generally resulted in significant adjustments to our results of operations.
We have elected the practical expedient to disclose only the value of remaining performance obligations for contracts with an original expected length of one year or more. At March 31, 2026, our open performance obligations with original
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expected duration of one year or more totaled $28,368. We expect to recognize the remaining revenues associated with unsatisfied or partially satisfied performance obligations within twelve months.
Pricing and Sales Incentives
Pricing is established at or prior to the time of sale with our customers and we record sales at the agreed-upon net selling price. Generally, we do not enter into sales contracts with customers that offer sales discounts or incentives.
Optional Exemptions, Practical Expedients and Policy Elections
We expense the incremental costs of obtaining a contract when incurred because the amortization period would be less than one year.
The Company has elected to treat shipping and handling activities as a cost of fulfillment rather than a separate performance obligation.
The Company has elected to use the practical expedient to not adjust the promised amount of consideration for the effects of a significant financing component if it is expected, at contract inception, that the period between when the Company transfers a promised good or service to a customer, and when the customer pays for that good or service, will be one year or less. Thus, the Company may not consider an advance payment to be a significant financing component, if it is received less than one year before product completion.
The Company has elected to exclude all sales and other similar taxes from the transaction price. Accordingly, the Company presents all collections from customers for sales and other similar taxes on a net basis, rather than having to assess whether the Company is acting as an agent or a principal in each taxing jurisdiction.
The Company has elected the "right to invoice" practical expedient for our time and materials service contracts. This practical expedient allows an entity that recognizes revenue over time to recognize revenue as invoiced if the entity’s right to payment is for an amount that corresponds directly with the value to the customer of the entity’s performance to date.
Contract Assets and Liabilities
Contract assets and liabilities are presented on our consolidated balance sheets. Contract assets consist of unbilled amounts resulting from sales under long-term contracts when the cost-to-cost method of revenue recognition is utilized and revenue recognized exceeds the amount billed to the customer. In addition, contract assets contain labor and material costs incurred under our time and material service contracts that have not been billed to the customer. Contract liabilities represent deferred revenue from advanced customer payments or billings in excess of costs incurred or revenue earned. The Company invoices customers pursuant to the terms of their related contract. Invoiced amounts are applied to individual contracts and an associated amount is either classified as a contract asset or contract liability depending on whether the revenue associated with the amounts billed had been earned (contract asset) or not (contract liability).
As of March 31, 2026 and 2025, contract assets were $26,737 and $19,188, respectively. There were no credit losses recognized on our contract assets for the year ended March 31, 2026, 2025, or 2024. As of March 31, 2026 and 2025, contract liabilities were $19,471 and $19,604, respectively. Substantially all contract liabilities at March 31, 2025 were recognized in revenue as of March 31, 2026.
Disaggregation of Revenue
We disaggregate our revenue from contracts with customers by geographic location as well as revenue recognized at a point-in-time and revenues recognized over time, as we believe these best depict the nature of our sales and the regions in which those sales are earned and managed.
Revenue recognized at a point-in-time occurs based on when control transfers to the customer and is generally related to our product sales. Revenue recognized over time occurs on our projects where engineering, manufactured materials, or installation services, or a combination of the three, are required. We recognize revenue related to such projects in a systematic way that reflects the transfer of service to the customer.
Disaggregation of revenues from contracts with customers for fiscal 2026, 2025 and 2024 are as follows:
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|  | Fiscal Year Ended March 31, 2026 |  |
|  | Revenues recognized at point-in-time |  | Revenues recognized over time |  | Total |  |  |  |  |  |
United States and Latin America |  | $ | 195,977 |  |  | $ | 67,311 |  |  | $ | 263,288 |  |  |  |  |  |  |
Canada |  | 110,913 |  |  | 52,925 |  |  | 163,838 |  |  |  |  |  |  |
Europe, Middle East and Africa |  | 47,685 |  |  | 23,871 |  |  | 71,556 |  |  |  |  |  |  |
Asia-Pacific |  | 20,977 |  |  | 16,604 |  |  | 37,581 |  |  |  |  |  |  |
Total revenues |  | $ | 375,552 |  |  | $ | 160,711 |  |  | $ | 536,263 |  |  |  |  |  |  |

|  | Fiscal Year Ended March 31, 2025
|  | Revenues recognized at point-in-time |  | Revenues recognized over time |  | Total
United States and Latin America |  | $ | 192,062 |  |  | $ | 63,944 |  |  | $ | 256,006 |
Canada |  | 110,124 |  |  | 48,845 |  |  | 158,969 |
Europe, Middle East and Africa |  | 26,559 |  |  | 18,761 |  |  | 45,320 |
Asia-Pacific |  | 24,327 |  |  | 13,585 |  |  | 37,912 |
Total revenues |  | $ | 353,072 |  |  | $ | 145,135 |  |  | $ | 498,207 |

|  | Fiscal Year Ended March 31, 2024
|  | Revenues recognized at point-in-time |  | Revenues recognized over time |  | Total
United States and Latin America |  | $ | 146,967 |  |  | $ | 109,326 |  |  | $ | 256,293 |
Canada |  | 101,351 |  |  | 53,968 |  |  | 155,319 |
Europe, Middle East and Africa |  | 26,581 |  |  | 18,720 |  |  | 45,301 |
Asia-Pacific |  | 25,707 |  |  | 12,009 |  |  | 37,716 |
Total revenues |  | $ | 300,606 |  |  | $ | 194,023 |  |  | $ | 494,629 |

6. Net Income per Common Share
Basic net income per common share is computed by dividing net income by the weighted average number of common shares outstanding during each period. Diluted net income per common share is computed by dividing net income by the weighted average number of common shares and common share equivalents outstanding (if dilutive) during each period. The number of common share equivalents, which includes options and both restricted and performance stock units, is computed using the treasury stock method. With regard to the performance stock units, we assume that the associated performance targets will be met at the target level of performance for purposes of calculating diluted net income per common share until such time that it is probable that the performance target will not be met.
The reconciliations of the denominators used to calculate basic net income per common share and diluted net income per common share for fiscal 2026, 2025, and 2024, respectively, are as follows:

|  | Year Ended March 31, 2026 |  | Year Ended March 31, 2025 |  | Year Ended March 31, 2024
Basic net income per common share |  |  |  |  |  |
Net income |  | $ | 44,571 |  |  | $ | 53,515 |  |  | $ | 51,588 |
Weighted-average common shares outstanding |  | 32,540,731 |  |  | 33,707,804 |  |  | 33,670,861 |
Basic net income per common share |  | $ | 1.37 |  |  | $ | 1.59 |  |  | $ | 1.53 |

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|  | Year Ended March 31, 2026 |  | Year Ended March 31, 2025 |  | Year Ended March 31, 2024
Diluted net income per common share |  |  |  |  |  |
Net income |  | $ | 44,571 |  |  | $ | 53,515 |  |  | $ | 51,588 |
Weighted-average common shares outstanding |  | 32,540,731 |  |  | 33,707,804 |  |  | 33,670,861 |
Common share equivalents: |  |  |  |  |  |
Stock options issued |  | 21,821 |  |  | 27,784 |  |  | 29,295 |
Restricted and performance stock units issued |  | 237,464 |  |  | 322,651 |  |  | 366,831 |
Weighted average shares outstanding – dilutive |  | 32,800,016 |  |  | 34,058,239 |  |  | 34,066,987 |
Diluted net income per common share |  | $ | 1.36 |  |  | $ | 1.57 |  |  | $ | 1.51 |

For the year ended March 31, 2026, 2025, and 2024, 1,820, zero, and 4,706 shares of equity awards, respectively, were not included in the calculation of diluted net income per common share since they would have had an anti-dilutive effect.
Share Repurchase Program
In fiscal 2024, we announced the authorization of a share repurchase program by the Company’s board of directors of up to $50,000 of the Company’s outstanding shares of common stock, exclusive of any fees, commissions or other expenses related to such repurchases (the "Repurchase Program"). On May 22, 2025, the Company announced that the board of directors had refreshed the authorization back to $50,000. The Repurchase Program does not include a specific timetable or price targets, except for the expiration of the Repurchase Program by May 15, 2027, and may be suspended or terminated at any time. Shares under the current repurchase program may be purchased through open market or privately negotiated transactions at the discretion of management, including through the use of trading plans intended to qualify under Rule 10b5-1 and Rule 10b-18 under the Securities Exchange Act of 1934, as amended.
During fiscal 2026, we purchased 601,125 shares at a weighted average price of $26.21. During fiscal 2025, we purchased 694,025 shares at a weighted average price of $28.99. At March 31, 2026, $38,463 remained authorized under the repurchase program. We record shares of common stock repurchased at cost in treasury stock, resulting in a reduction of stockholders’ equity in the consolidated balance sheets.
7. Inventories
Inventories, net consisted of the following:

| March 31,
| 2026 |  | 2025
Raw materials | $ | 77,259 |  |  | $ | 56,281 |
Work in process | 18,482 |  |  | 12,424 |
Finished goods | 27,045 |  |  | 23,562 |
| 122,786 |  |  | 92,267 |
Valuation reserves | (4,638) |  |  | (3,287) |
Inventories, net | $ | 118,148 |  |  | $ | 88,980 |

The following table summarizes the annual changes in our valuation reserve accounts:

Balance as of March 31, 2024 | $ | 3,767 |
Additions to reserve |  | 767 |
Charged to reserve |  | (1,247) |
Balance as of March 31, 2025 | 3,287 |
Additions to reserve |  | 1,702 |
Charged to reserve |  | (351) |
Balance as of March 31, 2026 | $ | 4,638 |

8. Property, Plant and Equipment
Property, plant and equipment, net consisted of the following:
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| March 31,
| 2026 |  | 2025
Land, buildings and improvements | $ | 63,989 |  |  | $ | 60,233 |
Machinery and equipment | 68,130 |  |  | 61,079 |
Office furniture and equipment | 21,367 |  |  | 18,945 |
Internally developed software | 5,213 |  |  | 5,213 |
Construction in progress | 2,974 |  |  | 3,127 |
Property, plant and equipment at cost | 161,673 |  |  | 148,597 |
Accumulated depreciation | (81,934) |  |  | (75,773) |
Property, plant and equipment, net | $ | 79,739 |  |  | $ | 72,824 |

Depreciation expense was $9,038, $8,658 and $8,679, in fiscal 2026, 2025, and 2024, respectively.
Included within depreciation expense was amortization of internally developed software of $29, $21, and $226, in fiscal 2026, 2025 and 2024, respectively.
9. Goodwill and Other Intangible Assets
The carrying amount of goodwill for all reporting segments as of March 31, 2026, 2025 and 2024 is as follows:

|  | US-LAM |  | Canada |  | EMEA |  | APAC |  | Total
Balance as of March 31, 2024 |  | $ | 133,095 |  |  | $ | 112,846 |  |  | $ | 18,532 |  |  | $ | 6,313 |  |  | $ | 270,786 |
Goodwill acquired(1) |  | (2,065) |  |  | — |  |  | 2,179 |  |  | — |  |  | 114 |
Foreign currency translation impact |  | — |  |  | (6,369) |  |  | 6 |  |  | (206) |  |  | (6,569) |
Balance as of March 31, 2025 |  | $ | 131,030 |  |  | $ | 106,477 |  |  | $ | 20,717 |  |  | $ | 6,107 |  |  | $ | 264,331 |
Goodwill acquired(1) |  | — |  |  | — |  |  | 268 |  |  | — |  |  | 268 |
Foreign currency translation impact |  | — |  |  | 3,229 |  |  | 1,301 |  |  | (88) |  |  | 4,442 |
Balance as of March 31, 2026 |  | $ | 131,030 |  |  | $ | 109,706 |  |  | $ | 22,286 |  |  | $ | 6,019 |  |  | $ | 269,041 |

(1) - Refer to Note 2, "Acquisition" for more information.
Our total intangible assets at March 31, 2026, and 2025 consisted of the following:

|  | Gross Carrying Amount at March 31, 2026 |  | Accumulated Amortization |  | Net Carrying Amount at March 31, 2026 |  | Gross Carrying Amount at March 31, 2025 |  | Accumulated Amortization |  | Net Carrying Amount at March 31, 2025
Products |  | $ | 59,794 |  |  | $ | (50,327) |  |  | $ | 9,467 |  |  | $ | 58,034 |  |  | $ | (43,042) |  |  | $ | 14,992 |
Trademarks |  | 54,717 |  |  | (5,092) |  |  | 49,625 |  |  | 53,882 |  |  | (3,838) |  |  | 50,044 |
Developed technology |  | 30,284 |  |  | (10,993) |  |  | 19,291 |  |  | 29,982 |  |  | (9,010) |  |  | 20,972 |
Customer relationships |  | 137,606 |  |  | (113,057) |  |  | 24,549 |  |  | 135,679 |  |  | (107,380) |  |  | 28,299 |
Certifications |  | 429 |  |  | — |  |  | 429 |  |  | 421 |  |  | — |  |  | 421 |
Other |  | 1,280 |  |  | (981) |  |  | 299 |  |  | 1,280 |  |  | (725) |  |  | 555 |
Total |  | $ | 284,110 |  |  | $ | (180,450) |  |  | $ | 103,660 |  |  | $ | 279,278 |  |  | $ | (163,995) |  |  | $ | 115,283 |

Products intangible assets have an estimated useful life of 10 years. Some trademarks and certifications have indefinite lives and some have useful lives of 5 years to 10 years. Developed technology has estimated useful lives of 15 years to 20 years. Customer relationships intangibles have useful lives of 2 years to 17 years. The other category of intangibles has an estimated useful life of 5 years. The weighted average useful life for the definite-lived intangibles is 13 years.
Intangible assets held in non-U.S. entities are valued in foreign currencies; accordingly, changes in indefinite life intangible assets, such as certifications, at March 31, 2026 and 2025 were the result of foreign currency translation adjustments. Foreign currency translation adjustments also impacted finite life intangible assets held in non-U.S. entities.
The Company recorded amortization expense of $13,428, $13,681, and $10,158 in fiscal 2026, 2025 and 2024, respectively for intangible assets. Annual amortization of intangible assets for the next five fiscal years and thereafter will approximate the following:
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2027 | $ | 11,716 |
2028 | 9,011 |
2029 | 5,480 |
2030 | 5,364 |
2031 | 4,965 |
Thereafter | 25,653 |
Total | $ | 62,189 |

10. Accrued Liabilities
Accrued current liabilities consisted of the following:

| March 31, 2026 |  | March 31, 2025
Accrued employee compensation and related expenses | $ | 27,725 |  |  | $ | 20,611 |
Accrued interest | 14 |  |  | 613 |
Warranty reserve | 2,427 |  |  | 2,766 |
Professional fees(1) | 12,155 |  |  | 3,067 |
Sales tax payable | 2,643 |  |  | 3,201 |
Accrued litigation payable | 631 |  |  | 1,006 |
Other(2) | 4,184 |  |  | 4,524 |
Total accrued current liabilities | $ | 49,779 |  |  | $ | 35,788 |

(1) - Professional fees include approximately $9,822 of transaction costs related to the Merger. Refer to Note 14, "Commitments and Contingencies" for more information.
(2) - Included in Other in both fiscal 2026 and 2025 is $1,996 related to a dispute with a customer.
11. Revolving Credit Facilities
Under the Company’s senior secured revolving credit facility described below in Note 12, “Long-Term Debt,” the Company had outstanding borrowings of $19,700 at March 31, 2026, and no outstanding borrowings at March 31, 2025.
12. Long-Term Debt
Long-term debt consisted of the following:

| March 31, 2026 |  | March 31, 2025
U.S. Term Loan due September 2026, net of deferred debt issuance costs of zero and $126 as of March 31, 2026, and March 31, 2025, respectively | $ | — |  |  | $ | 60,873 |
2023 Incremental U.S. Term Loan due September 2026, net of deferred debt issuance costs of zero and $382 as of March 31, 2026, and March 31, 2025, respectively | — |  |  | 77,493 |
Amended U.S. Term Loan Facility due July 2030, net of deferred debt issuance costs of $503 as of March 31, 2026 | 121,372 |  |  | — |
Less current portion | (7,813) |  |  | (18,000) |
Total | $ | 113,559 |  |  | $ | 120,366 |

Senior Secured Credit Facilities
Senior Secured Credit Facilities
On July 24, 2025, Thermon Group Holdings, Inc., as a credit party and a guarantor, Thermon Holding Corp. (the “US Borrower”), Thermon Canada Inc. (the “Canadian Borrower”) and Thermon Europe B.V. (the “Dutch Borrower” and together with the US Borrower and the Canadian Borrower, the “Borrowers”), as borrowers, entered into a Second Amended and Restated Credit Agreement (the “Credit Agreement”) with several banks and other financial institutions or entities (the “Lenders”) and JPMorgan Chase Bank, N.A., as Administrative Agent (the “Agent”).
The Credit Agreement is an amendment and restatement of that certain Amended and Restated Credit Agreement, dated September 29, 2021, by and among the Company, the US Borrower, the Canadian Borrower, the lenders time to time
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party thereto and JPMorgan Chase Bank, N.A. as administrative agent (the “Prior Credit Agreement”), and provides for the credit facilities described below (collectively, the “Facilities”).
Facilities.
•Revolving Credit Facility: A US $115.0 million five-year secured revolving credit facility made available in U.S. Dollars to the US Borrower, in Canadian Dollars to the Canadian Borrower, and in Euros to the Dutch Borrower, provided that drawings in Euros shall not exceed €20,000,000 in the aggregate (the “Revolving Credit Facility”). The Revolving Credit Facility includes sublimits for letters of credit and swingline loans.
•Term Loan Facility: A US $125.0 million five-year secured term loan A (the “Term Loan”) made available in U.S. Dollars to the US Borrower (the “Term Loan Facility”).
Proceeds of the Facilities were used at closing to repay and refinance existing indebtedness under the Prior Credit Agreement and pay all interest, fees and expenses related thereto, and thereafter shall be used for working capital and general corporate purposes.
Accordion. The Credit Agreement allows for incremental term loans and incremental revolving commitments in an aggregate amount not to exceed the greater of US $125.0 million and amount equal to 100% of consolidated EBITDA of the Company and its subsidiaries for the most recently ended four consecutive fiscal quarter period.
Maturity and Repayment. Each of the Facilities terminates on July 24, 2030. Commencing December 31, 2025, the Term Loan will amortize as set forth in the table below, with payments due on the last day of each March, June, September and December, with the balance of the Term Loan Facility due at maturity:

Quarterly Installment Dates |  | Principal Amount
December 31, 2025, through September 30, 2026 |  | 1.250%
December 31, 2026, through June 30, 2030 |  | 1.875%

Guarantees. The Term Loan, the obligations of each of the Borrowers (including the Dutch Borrower) under the Revolving Credit Facility and the obligations of the Company and its subsidiaries under “Specified Swap Agreements,” “Specified Cash Management Agreements,” “Specified Bank Guarantees” and “Specified Bond Obligations” (in each case, as such terms are defined in the Credit Agreement) owed to any Lender or any affiliate thereof are all guaranteed by the Company, the US Borrower, all of the US Borrower’s current and future wholly owned domestic material subsidiaries (the “US Subsidiary Guarantors”), the Canadian Borrower and all of the Canadian Borrower’s wholly owned Canadian material subsidiaries, if any (the “Canadian Subsidiary Guarantors”). In addition, the obligations of the Dutch Borrower under the Revolving Credit Facility will also be guaranteed by each wholly owned material Dutch subsidiary of the Dutch Borrower, if any (the “Dutch Subsidiary Guarantors”).
Security. The Term Loan, the obligations of each of the Borrowers (including the Dutch Borrower) under the Revolving Credit Facility and the obligations of the Company and its subsidiaries under “Specified Swap Agreements,” “Specified Cash Management Agreements,” “Specified Bank Guarantees” and “Specified Bond Obligations” (in each case as such terms are defined in the Credit Agreement) owed to any Lender or any affiliate thereof are all secured by a first lien on substantially all of the assets of the Company, the US Borrower, the US Subsidiary Guarantors, the Canadian Borrower and the Canadian Subsidiary Guarantors, subject to certain exceptions, including 100% of the capital stock of the Canadian Borrower, the Dutch Borrower, the US Subsidiary Guarantors and the Canadian Subsidiary Guarantors, and 65% of the capital stock of the first-tier material foreign subsidiaries (other than the Canadian Borrower and the Dutch Borrower) of the Company, the US Borrower and the US Subsidiary Guarantors. In addition, the obligations of the Dutch Borrower under the Revolving Credit Facility will also be secured by a first lien on certain assets, including account rights, movable assets and receivables, of the Dutch Borrower and each Dutch Subsidiary Guarantor.
Interest Rates and Fees. The US Borrower will have the option to pay interest on the Term Loan and borrowings made to the US Borrower under the Revolving Credit Facility at a base rate, plus an applicable margin, or at a rate based on Secured Overnight Financing Rate ("SOFR") plus an applicable margin. The Canadian Borrower will have the option to pay interest on borrowings made to the Canadian Borrower under the Revolving Credit Facility at a prime rate plus an applicable margin, or at a rate based on the Canadian Overnight Repo Rate ("CORRA") plus an applicable margin. The Dutch Borrower shall pay interest on borrowings made to the Dutch Borrower under the Revolving Credit Facility at a rate based on Euro Interbank Offered Rate ("EURIBOR") plus an applicable margin.
Under the applicable Facilities, the applicable margin for base rate loans and Canadian prime rate loans is 50.0 basis points and the applicable margin for SOFR loans, CORRA loans and EURIBOR loans is 150.0 basis points; provided that, after December 31, 2025, the applicable margins will be determined based on a leverage-based performance grid.
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In addition to paying interest on outstanding principal under the Revolving Credit Facility, the US Borrower is required to pay a commitment fee in respect of unutilized revolving commitments of 0.25% per annum, provided that, after December 31, 2025, the commitment fee will be determined based on a leverage-based performance grid.
Voluntary Prepayment. The Borrowers will be able to voluntarily prepay the principal of the loans outstanding under each of the Facilities without penalty or premium (subject to breakage fees) at any time in whole or in part.
Mandatory Prepayment. To the extent the US Borrower receives proceeds stemming from certain asset sales, insurance claims, and debt issuances, the US Borrower is obligated to use those proceeds to pay down the Term Loan.
Financial Covenants. The Company is required, on a consolidated basis, to maintain certain financial covenant ratios. On the last day of any period of four fiscal quarters ending on or after June 30, 2025, the Company must maintain a consolidated leverage ratio that does not exceed 3.50:1.00 (which ratio may be increased by 0.50:1.00 for each of the four fiscal quarters following certain acquisitions at the election of the US Borrower).
In addition, on the last day of any period of four fiscal quarters ending on or after June 30, 2025, the Company must maintain a consolidated fixed charge coverage ratio of not less than 1.25:1.00. As of March 31, 2026, the Company was in compliance with all financial covenants under the Credit Agreement.
Other Covenants. The Credit Agreement contains restrictive covenants (in each case, subject to exclusions) that limit, among other things, the ability of the Company and its subsidiaries (including the Borrowers) to: (i) incur additional indebtedness; (ii) grant liens; (iii) make fundamental changes; (iv) sell assets; (v) make restricted payments; (vi) enter into sales and leasebacks; (vii) make investments; (viii) prepay certain indebtedness; (ix) enter into transactions with affiliates; and (x) enter into certain restrictive agreements.
The covenants are subject to various baskets and materiality thresholds, with certain of the baskets to the restrictions on the repayment of subordinated or unsecured indebtedness, restricted payments and investments being available only when the Company’s pro forma leverage ratios are less than a certain level.
The Credit Agreement contains certain customary representations and warranties, affirmative covenants and events of default, including, among other things, payment defaults, breach of representations and warranties, covenant defaults, cross-defaults to certain indebtedness, certain events of bankruptcy, certain events under ERISA, judgment defaults, actual or asserted failure of any guaranty or security documents to be in full force and effect and change of control. If such an event of default occurs, the Agent will be entitled to take various actions, including the termination of the commitment for the Revolving Credit Facility, the acceleration of amounts due under the Credit Agreement and all other actions that a secured creditor is permitted to take following a default.
Debt Issuance Costs
The Company capitalizes and defers the costs associated with establishing our debt and financing arrangements. These costs are amortized as interest expense over the life of the loan or related financing. Additionally, for any unscheduled principal payments the Company will record incremental deferred debt charges on a pro rata basis of the unamortized deferred debt balance at the time of the repayment. When debt or the contract is retired prematurely, the proportionate unamortized deferred issuance costs are expensed as loss on retirement. Deferred debt issuance costs expensed as part of interest expense for fiscal 2026, 2025 and 2024 were $497, $486 and $489, respectively.
We incurred fees to third parties in connection with our entry into the agreements described above. In fiscal 2024, in connection with the 2023 Incremental U.S. Term Loan Facility, we incurred $759 in debt issuance costs.
At March 31, 2026, we had $94,287 of available borrowing capacity after taking into account amounts drawn under the Revolving Credit Facility and outstanding letters of credit totaling $1,013. The term loans bear interest at the SOFR rate plus an applicable margin dictated by our leverage ratio (as described above). The interest rate was 5.17% for the U.S. Term Loan Facility and the Revolving Credit Facility. Interest expense has been presented net of interest income on our consolidated statements of operations and comprehensive income.
Maturities of long-term debt principal payments are as follows for the fiscal years ended March 31:

2027 |  | $ | 7,813 |
2028 |  | 9,375 |
2029 |  | 9,375 |
2030 |  | 9,375 |
2031 |  | 85,937 |
Total |  | $ | 121,875 |

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13. Employee Benefits
The Company has defined contribution plans covering substantially all domestic employees and certain foreign subsidiary employees who meet predefined service and eligibility requirements. Participant benefits are 100% vested upon participation. The Company matches employee contributions, limited to 50% of the first 10% of each eligible employee's salary contributed. The Company's matching contributions to defined contribution plans on a consolidated basis were approximately $3,620, $3,746, and $3,611 in fiscal 2026, 2025, and 2024, respectively.
The Company has an incentive compensation program to provide employees with incentive pay based on the Company's ability to achieve certain sales, profitability, and non-financial objectives. From time to time, the Human Capital Management Committee of the Board of Directors, at its sole discretion, can add additional amounts to the overall incentive pay achieved. The Company recorded approximately $14,376, $6,563, and $6,205 for incentive compensation earned and other discretionary amounts in fiscal 2026, 2025, and 2024, respectively.
The Company provides a non-qualified deferred compensation plan for certain highly compensated employees where payroll contributions are made by the employees on a pre-tax basis. Included in “Other non-current assets” in the consolidated balance sheets at March 31, 2026 and 2025 were $9,020 and $8,206, respectively, of deferred compensation plan assets held by the Company. The Company has a corresponding liability to participants of $8,831 and $8,030 included in “Other non-current liabilities” in the consolidated balance sheet at March 31, 2026 and 2025, respectively. Deferred compensation plan expense/(income) was $599, $452, and $1,231 for the years ended March 31, 2026, 2025, and 2024 respectively, and is presented as such in our consolidated statements of operations and comprehensive income. Expenses and income from our deferred compensation plan were mostly offset by unrealized gains and losses for the deferred compensation plan included in other income/(expense) on our consolidated statements of operations and comprehensive income. Our unrealized (gains)/losses on investments were $(611), $(499), and $(1,290) for the year ended March 31, 2026, 2025, and 2024, respectively.
14. Commitments and Contingencies
Letters of Credit, Bank Guarantees, and Other Commitments
The Company maintains letters of credit, bank guarantees, and performance bonds. Together, these totaled $11,408 and $13,174 at March 31, 2026 and 2025, respectively, and are described further below.
We had $5,751 and $7,867 of outstanding letters of credit issued to customers at March 31, 2026 and 2025, respectively. This amount includes $1,417 and $789 at March 31, 2026 and 2025, respectively, in cash‑secured bank guarantees, as described in Note 1, “Organization and Summary of Significant Accounting Policies.” The remaining balance consists of $1,013 and $2,108 in letters of credit that reduce the borrowing capacity under our Revolving Credit Facility and $3,322 and $4,670 in letters of credit that do not affect borrowing capacity and do not require restricted cash at March 31, 2026 and 2025, respectively.
We had $5,657 and $5,307 of outstanding performance bonds primarily related to the Company's engineered solutions and related projects.
In addition to the $11,408 and $13,174 described above, our Indian subsidiary also had $3,866 and $4,247 of non‑collateralized customs bonds outstanding to support customs and duties obligations in India, at March 31, 2026 and 2025, respectively.
In connection with the Merger with CECO, the Company has entered into an engagement with Morgan Stanley for financial advisory and related services, pursuant to which fees of approximately $33,136 may become payable in connection with the successful completion of the Merger. As of the reporting date, no liability has been recorded for these fees, as the services giving rise to the obligation had not yet been rendered.
The Company has entered into information technology service agreements with several vendors. The service fees expense amounted to $5,075, $4,857, and $4,018 in fiscal 2026, 2025, 2024, respectively. The future annual service fees under the service agreements are as follows for the fiscal years ended March 31:

2027 | $ | 956 |
2028 | 346 |
2029 | 346 |
2030 | 91 |
2031 | — |
Thereafter | — |
Total | $ | 1,739 |

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Changes in the Company's warranty reserve are as follows:

Balance at March 31, 2024 |  | $ | 978 |
Reserve for warranties issued during the period |  | 3,165 |
Settlements made during the period |  | (1,378) |
Balance at March 31, 2025 |  | $ | 2,765 |
Reserve for warranties issued during the period |  | 2,241 |
Settlements made during the period |  | (2,579) |
Balance at March 31, 2026 |  | $ | 2,427 |

Legal Proceedings
We are involved in various legal and administrative proceedings that arise from time to time in the ordinary course of doing business. Some of these proceedings may result in fines, penalties or judgments being assessed against us, which may adversely affect our financial results. In addition, from time to time, we are involved in various disputes, which may or may not be settled prior to legal proceedings being instituted and which may result in losses in excess of accrued liabilities, if any, relating to such unresolved disputes. As of March 31, 2026, we have established an estimated liability associated with the aforementioned disputes. Expenses related to litigation reduce operating income. We do not believe that the outcome of any of these proceedings or disputes would have a material adverse effect on our financial position, long-term results of operations, or cash flows. It is possible, however, that charges related to these matters could be significant to our results of operations or cash flows in any one reporting period. Refer to Note 10, "Accrued Liabilities" for more information regarding our accruals related to these proceedings.
15. Stock-Based Compensation
The Board of Directors has adopted and the stockholders have approved three stock option award plans. The 2010 Thermon Group Holdings, Inc. Restricted Stock and Stock Option Plans ("2010 Plan") was approved on July 28, 2010. The plan authorized the issuance of 2,767,171 stock options or restricted shares (on a post stock split basis). On April 8, 2011, the Board of Directors approved the Thermon Group Holdings, Inc. 2011 Long-Term Incentive Plan ("2011 LTIP"). The 2011 LTIP made available 2,893,341 shares of the Company's common stock that may be awarded to employees, directors or non-employee contractors' compensation in the form of stock options or restricted stock awards. On May 21, 2020, the Board of Directors approved the Thermon Group Holdings, Inc. 2020 Long-Term Incentive Plan ("2020 LTIP"). The 2020 LTIP made available 1,400,000 shares of the Company's common stock that may be awarded to employees, directors, or non-employee contractors' compensation in the form of stock options or restricted stock awards. Collectively, the 2010 Plan, the 2011 LTIP, and the 2020 LTIP are referred to as the "Stock Plans." Accordingly, the vesting of restricted stock units and performance stock units and the exercise of stock options result in the issuance of additional new shares of the Company's stock. For fiscal 2026, 2025, and 2024, we recorded stock-based compensation of $8,244, $5,244, and $5,754, respectively.
Unvested options outstanding are scheduled to cliff vest over three years with 100% vesting on the third anniversary date of the grant. Stock options must be exercised within 10 years from date of grant. Stock options were issued with an exercise price which was equal to the market price of our common stock at the grant date. We account for forfeitures as they occur, rather than estimate expected forfeitures.
Stock Options
A summary of stock option activity under our Stock Plans for fiscal 2026, 2025, and 2024 is as follows:

|  |  | Options Outstanding
|  |  | Number of Shares |  | Weighted Average Exercise Price
Balance at March 31, 2023 |  | 74,366 |  | $ | 16.33 |
| Expired |  | — |  |  | — |
Balance at March 31, 2024 |  | 74,366 |  | $ | 16.33 |
| Exercised |  | (33,573) |  | 18.83 |
Balance at March 31, 2025 |  | 40,793 |  | $ | 14.28 |
| Exercised |  | (5,074) |  | 14.28 |
Balance at March 31, 2026 |  | 35,719 |  | $ | 14.28 |

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For fiscal 2026, 2025, and 2024, the intrinsic value of stock option exercises was $183, $303, and zero, respectively. As of March 31, 2026, there was no unrecognized expense related to unvested stock option awards.
The following table summarizes information about stock options outstanding as of March 31, 2026:

|  | Options Outstanding |  | Options Vested and Exercisable
Exercise Price |  | Number Outstanding |  | Weighted Average Contractual Life (Years) |  | Weighted Average Exercise Price |  | Aggregate Intrinsic Value at March 31, 2026 |  | Number Vested and Exercisable |  | Weighted Average Contractual Life (Years) |  | Weighted Average Exercise Price |  | Aggregate Intrinsic Value at March 31, 2026
$14.28 |  | 35,719 |  | 4.2 |  | $ | 14.28 |  |  | $ | 1,290 |  |  | 35,719 |  |  | 4.2 |  | $ | 14.28 |  |  | $ | 1,290 |

The aggregate intrinsic value in the preceding table represents the total intrinsic value based on our closing stock price o f $50.40 as of the last business day in the fiscal year ended March 31, 2026, which would have been received by the option holders had all option holders exercised as of that date.
Stock options are valued by using a Black-Scholes-Merton option pricing model. We calculate the value of our stock option awards when they are granted. Accordingly, we update our valuation assumptions for volatility and the risk-free interest rate each quarter that option grants are awarded. Annually, we prepare an analysis of the historical activity within our option plans as well as the demographic characteristics of the grantees of options within our stock option plan to determine the estimated life of the grants and possible ranges of estimated forfeiture. The expected life was determined using the simplified method for estimating expected option life for awards that qualify as "plain-vanilla" options. The risk-free interest rate is based on the rate of a zero-coupon U.S. Treasury instrument with a remaining term approximately equal to the expected term. We do not expect to pay dividends in the near term and therefore do not incorporate the dividend yield as part of our assumptions.
Director Awards and Restricted Stock Units
We issue fully vested common stock in lieu of restricted stock awards to our non-executive directors. Also, we grant restricted stock units to certain employees. For all employee awards of restricted stock units, we do not issue common shares until the vesting period is completed. The Company allows participant employees to withhold a portion of their restricted stock units upon the vesting dates in order to satisfy their tax obligation. For both the non-executive director common stock awards and restricted stock units to employees, fair value is determined by the market value of our common stock on the date of the grant.
During fiscal 2026, 2025, and 2024 we issued 20,526, 21,940 and 22,829 fully vested common shares to directors which had a total fair value of $615, $665, and $695 based on the closing price of our common stock on the date of issuance, respectively. As of March 31, 2026, there were no outstanding restricted stock awards.
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The following table summarizes the activity with regard to unvested restricted stock units issued to employees during fiscal 2026, 2025, and 2024.

Restricted Stock Units |  | Number of Shares |  | Weighted Average Grant Fair Value
Balance of unvested units at March 31, 2023 |  | 336,254 |  | $ | 16.12 |
| Granted |  | 135,963 |  | 23.26 |
| Released |  | (176,813) |  |  | 15.12 |
| Forfeited |  | (3,590) |  |  | 20.57 |
Balance of unvested units at March 31, 2024 |  | 291,814 |  |  | $ | 20.00 |
| Granted |  | 122,730 |  |  | 32.13 |
| Released |  | (132,365) |  |  | 18.94 |
| Forfeited |  | (22,507) |  |  | 22.03 |
Balance of unvested units at March 31, 2025 |  | 259,672 |  | $ | 26.10 |
| Granted |  | 145,490 |  | 25.64 |
| Released |  | (136,045) |  | 21.34 |
| Forfeited |  | (12,670) |  | 26.79 |
Balance of unvested units at March 31, 2026 |  | 256,447 |  | $ | 26.97 |

Based on our closing stock price of $50.40, the aggregate intrinsic value of the unvested restricted stock units at March 31, 2026 was $3,948. Total unrecognized expense related to unvested restricted stock units was approximately $4,051 as of March 31, 2026. We anticipate this expense to be recognized over a weighted average period of approximately 1.6 years.
Performance Stock Units
During fiscal 2026, 2025, and 2024, performance stock unit awards were issued to our executive officers and other members of management and had total estimated grant date fair values of $2,827, $2,277 and $2,547, respectively. For the fiscal 2026 awards, the performance indicator for these awards is either the Company's Adjusted EBITDA or return on invested capital ("ROIC"). The target number of shares is 58,687 and 50,302 for the Adjusted EBITDA and ROIC awards, respectively. We have legacy awards which utilize the stock price indicator to measure our stock price relative to a predetermined peer group of companies with similar business characteristics as ours. We refer to these awards as Relative Total Shareholder Return, or "RTSR" awards. Since these awards were market-based, we prepared a Monte Carlo valuation model to calculate the probable outcome of the market for our stock to arrive at the fair value. The fair value of the market-based units will be expensed over three years, whether or not the market condition is met. For those awards utilizing an Adjusted EBITDA indicator or the ROIC indicator, a target is established for each of the next three years from the grant date. Since these are performance-based stock awards, the Company will make estimates of periodic expense until the performance is known and the expense for actual number of shares earned is determinable.
During fiscal 2026, the following performance was achieved: Adjusted EBITDA-based performance awards earned approximately 150% of target and the ROIC-related awards earned approximately 200% to be paid at vesting.
During fiscal 2025, the following performance was achieved: Adjusted EBITDA-based performance awards earned approximately 84% of target, the RTSR awards earned approximately 200%, and the ROIC-related awards earned approximately 91% to be paid at vesting.
During fiscal 2024, certain Adjusted EBITDA-based performance awards earned 82% of their target based on the Company's performance during the fiscal year, the RTSR awards earned approximately 106% of their target, and the ROIC-related awards earned approximately 200% to be paid at vesting.
For performance stock units, the performance period will end on the third fiscal year end subsequent to the award being granted. It will then be determined how many shares of stock will be issued. In each year of the performance period, the possible number of shares will range from zero percent to two hundred percent of the target shares.
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The following table summarizes the target number of performance stock units outstanding and the minimum and maximum number of shares that can be earned as of March 31, 2026.

Fiscal Year Granted | Target |  | Minimum |  | Maximum
Fiscal 2024 | 100,180 |  | — |  | 200,360
Fiscal 2025 | 67,373 |  | — |  | 134,746
Fiscal 2026 | 108,989 |  | — |  | 217,978

In fiscal 2026, 2025 and 2024, the performance objectives for 150,143, 87,972 and 141,608 awards, respectively, were earned.
At March 31, 2026, there was $2,514 in stock compensation that remained to be expensed related to performance stock units, which will be recognized over a period of 1.6 years.
16. Other Income/(Expense)
Other income/(expense) consisted of the following:

| Year-Ended March 31, 2026 |  | Year-Ended March 31, 2025 |  | Year-Ended March 31, 2024
Foreign currency transaction gain/(loss) | $ | (75) |  |  | $ | (563) |  |  | $ | 243 |
Gain/(loss) on foreign exchange forwards | (632) |  |  | 637 |  |  | (447) |
Gain/(loss) on investments from deferred compensation plan | 611 |  |  | 499 |  |  | 1,290 |
Gain on insurance settlement | 850 |  |  | — |  |  | — |
Other income/(expense) | 728 |  |  | 114 |  |  | 62 |
Total other income/(expense) | $ | 1,482 |  |  | $ | 687 |  |  | $ | 1,148 |

17. Income Taxes
Income taxes included in the consolidated income statement consisted of the following:

|  | Year Ended March 31, 2026 |  | Year Ended March 31, 2025 |  | Year Ended March 31, 2024
Current provision: |  |  |  |  |
| Federal provision | $ | 4,275 |  |  | $ | 3,725 |  |  | $ | 5,643 |
| Foreign provision | 13,625 |  |  | 12,795 |  |  | 11,315 |
| State provision | 1,136 |  |  | 1,164 |  |  | 1,207 |
Deferred provision: |  |  |  |  |
| Federal deferred provision (benefit) | 1,180 |  |  | 252 |  |  | (329) |
| Foreign deferred benefit | (705) |  |  | (1,426) |  |  | (1,626) |
| State deferred provision (benefit) | 144 |  |  | 94 |  |  | (124) |
Total provision for income taxes | $ | 19,655 |  |  | $ | 16,604 |  |  | $ | 16,086 |

Deferred income tax assets and liabilities were as follows:
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|  |  | March 31,
|  |  | 2026 |  | 2025
Deferred tax assets: |  |  |  |
| Accrued liabilities and reserves |  | $ | 8,938 |  |  | $ | 6,753 |
| Capitalized research and development costs |  | 2,029 |  |  | 3,744 |
| Foreign deferred benefits |  | 1,373 |  |  | 1,162 |
| Stock option compensation |  | 1,010 |  |  | 886 |
| Net operating loss carryforward |  | 1,006 |  |  | 428 |
| Inventories |  | 1,139 |  |  | 801 |
| Capitalized transaction costs |  | 343 |  |  | 373 |
| Tax credit carryforward |  | 295 |  |  | 674 |
| Unrealized gain on hedge |  | — |  |  | 21 |
Total deferred tax assets |  | $ | 16,133 |  |  | $ | 14,842 |
| Less valuation allowance |  | (748) |  |  | (553) |
Deferred tax assets, net of valuation allowance |  | $ | 15,385 |  |  | $ | 14,289 |
Deferred tax liabilities: |  |  |  |
Intangible assets |  | $ | (6,632) |  |  | $ | (6,278) |
Intangible and other - foreign |  | (8,599) |  |  | (9,632) |
Property, plant and equipment |  | (7,920) |  |  | (5,546) |
Prepaid expenses |  | (333) |  |  | (327) |
Unrealized loss on hedge |  | (58) |  |  | — |
Undistributed foreign earnings |  | (1,583) |  |  | (1,367) |
Total deferred tax liabilities |  | $ | (25,125) |  |  | $ | (23,150) |
Net deferred tax liability |  | $ | (9,740) |  |  | $ | (8,861) |

The Company expects that it is more likely than not that the results of future operations will generate sufficient taxable income to realize its domestic and foreign deferred tax assets, net of valuation allowance reserves.
The U.S. and non-U.S. components of income from continuing operations before income taxes were as follows:

|  | Year Ended March 31, 2026 |  | Year Ended March 31, 2025 |  | Year Ended March 31, 2024
U.S. |  | $ | 19,050 |  |  | $ | 30,135 |  |  | $ | 28,065 |
Non-U.S. |  | 45,176 |  |  | 39,984 |  |  | 39,609 |
Income from continuing operations |  | $ | 64,226 |  |  | $ | 70,119 |  |  | $ | 67,674 |

The following table summarizes the jurisdictions in which the Company paid income taxes during the year ended March 31, 2026. Amounts represent cash income taxes paid, net of refunds, in each jurisdiction.
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Jurisdiction |  | Year Ended March 31, 2026
United States: |  |
Federal |  | $ | 4,111 |
State(1) |  | 1,093 |
Total United States |  | $ | 5,204 |
Foreign: |  |
Canada |  | $ | 10,774 |
All other foreign(2) |  | 2,022 |
Total Foreign |  | $ | 12,796 |
Total income taxes paid, net |  | $ | 18,000 |

(1) No individual state tax exceeded 5% of total taxes paid.
(2) No individual foreign jurisdiction exceeded 5% of total, other than Canada.
The difference between the provision for income taxes and the amount that would result from applying the U.S. statutory tax rate to income before provision for income taxes is as follows:

|  |  | Year Ended March 31, 2026 |  | %
Statutory federal tax rate | $ | 13,487 |  |  | 21.0 | %
Domestic tax effects: |  |  |
| Domestic state income taxes, net of federal effect (a) | 1,034 |  |  | 1.7 | %
| Transaction costs | 2,658 |  | 4.1 | %
| Non-deductible compensation | 843 |  | 1.2 | %
| Change in valuation allowance | (441) |  |  | (0.7) | %
| Other, net | (16) |  |  | — | %
Foreign tax effects: |  |  |
| Canada: |  |  |
| Statutory income tax rate differential |  | (2,114) |  |  | (3.3) | %
| Regional income taxes |  | 3,133 |  |  | 4.9 | %
| Withholding taxes |  | 1,204 |  |  | 1.9 | %
| Other reconciling items |  | 135 |  |  | 0.3 | %
| Italy | 264 |  |  | 0.4 | %
| Other foreign jurisdictions | 532 |  |  | 0.8 | %
Effects of cross-border tax laws | (572) |  |  | (0.9) | %
Tax credits | (492) |  |  | (0.8) | %
| $ | 19,655 |  |  | 30.6 | %

(a) State taxes in CA, GA, IL, LA, TN and TX made up the majority (greater than 50%) of the tax effect in this category.
The reconciliation of taxes at the federal statutory rate to our provision for (benefit from) income taxes for the year ended March 31, 2025 and 2024 in accordance with the guidance prior to the adoption of ASU 2023-09 was as follows:
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|  |  |  | Year Ended March 31, 2025 |  | Year Ended March 31, 2024
Notional U.S. federal income tax expense at statutory rate |  | $ | 14,725 |  |  | $ | 14,252 |
Adjustments to reconcile to the income tax provision: |  |  |  |
| Rate difference-international subsidiaries |  | 1,252 |  |  | 482 |
|  | Withholding on intercompany dividends and income |  | 1,726 |  |  | — |
|  | Charges/(benefits) related to uncertain tax positions |  | (1,046) |  |  | 84 |
|  | U.S. state income tax provision, net |  | 994 |  |  | 912 |
|  | Undistributed foreign earnings |  | 683 |  |  | 371 |
|  | Tax credits available in the U.S. |  | (902) |  |  | (425) |
|  | Change in valuation allowance |  | 353 |  |  | (37) |
|  | Russian loss not benefited |  | — |  |  | 207 |
|  | Non-deductible charges |  | (39) |  |  | 741 |
|  | Stock compensation |  | (58) |  |  | 178 |
|  | Impact of U.S. global intangible taxes and benefits |  | (612) |  |  | (560) |
|  | Other, net |  | (472) |  |  | (119) |
Provision for income taxes |  | $ | 16,604 |  |  | $ | 16,086 |

We operate in multiple international geographies. Our tax expense is reflective of the blended tax rate across those jurisdictions. We do not assert a permanent reinvestment position in any of our foreign subsidiaries. Accordingly, we expect to repatriate certain earnings that will be subject to withholding taxes. At March 31, 2026 we have accrued $1,583 as an additional deferred tax liability associated with the future repatriation of earnings from jurisdictions that withhold taxes on foreign paid dividends.
As of March 31, 2026, the Company had foreign tax net operating loss carry-forwards ("NOLs") of $3,831. Of this amount, $448 may be carried forward indefinitely. As of March 31, 2026, the tax years 2021 through 2025 remain open to examination by the major taxing jurisdictions to which we are subject.
During fiscal 2025, we released our reserves of $1,046 for uncertain tax position which consisted of positions related to the final Transition Tax, which is associated with the Tax Act of 2018. We released these reserves as they are no longer subject to examination by tax authorities.
18. Segment Information
We maintain four reportable segments based on four geographic countries or regions in which we operate: (i) United States and Latin America ("US-LAM"), (ii) Canada, (iii) Europe, Middle East and Africa ("EMEA") and (iv) Asia-Pacific ("APAC"). Within our four reportable segments, our core products and services are focused on the following markets: general industrial, chemical and petrochemical, oil, gas, power generation, commercial, food and beverage, rail and transit, and other, which we refer to as our "key end markets."
We offer a full suite of products (heating units, electrode and gas-fired boilers, heating cables, industrial heating blankets and related products, temporary power solutions and tubing bundles), services (engineering, installation and maintenance services) and software (design optimization and wireless and network control systems) required to deliver comprehensive solutions to some of the world's largest and most complex projects. Our Chief Operating Decision Maker ("CODM") is our President and Chief Executive Officer. Our CODM uses the reported measure of segment profit or loss to assess segment performance and allocate resources to the segments informed by a strategic process to optimize value to our shareholders.
We measure the profitability of our consolidated entity using "Segment profit." Segment profit is sales reviewed by the CODM, less cost of sales and selling, general, and administrative expenses, adjusted. For purposes of this note, sales and expenses reviewed by the CODM are attributed to segments on the basis of the business unit of record. Sales as stated on our consolidated statements of operations and comprehensive income is based on the legal entity of record.
We transact business frequently between our legal entities through intercompany transactions. These transactions result in intersegment sales and costs recognized. We account for such transactions using our transfer pricing methodology and intercompany transactions are eliminated upon consolidation.
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For the year ended March 31, 2026 | US-LAM |  | Canada |  | EMEA |  | APAC |  | Total
Sales(1) | $ | 263,288 |  |  | $ | 163,838 |  |  | $ | 71,556 |  |  | $ | 37,581 |  |  | $ | 536,263 |
Adjustments(1) | 17,851 |  |  | (23,073) |  |  | 1,122 |  |  | 4,100 |  |  | — |
Sales reviewed by the CODM | $ | 281,139 |  |  | $ | 140,765 |  |  | $ | 72,678 |  |  | $ | 41,681 |  |  | $ | 536,263 |
Less:(2) |  |  |  |  |  |  |  |  |
Cost of sales | 150,554 |  |  | 75,394 |  |  | 42,425 |  |  | 24,834 |  |  | 293,207 |
Selling, general, and administrative expenses, adjusted(3) | 64,087 |  |  | 24,163 |  |  | 22,004 |  |  | 11,950 |  |  | 122,204 |
Segment profit | $ | 66,498 |  |  | $ | 41,208 |  |  | $ | 8,249 |  |  | $ | 4,897 |  |  | $ | 120,852 |
Reconciliation to Income before provision for income taxes: |  |  |  |  |  |  |  |  |
Deferred compensation plan (expense)/income |  |  |  |  |  |  |  |  | $ | (599) |
Depreciation and amortization |  |  |  |  |  |  |  |  | (22,466) |
Other unallocated enterprise expense(4) |  |  |  |  |  |  |  |  | (27,048) |
Interest expense, net |  |  |  |  |  |  |  |  | (7,995) |
Other income/(expense) |  |  |  |  |  |  |  |  | 1,482 |
Income before provision for income taxes |  |  |  |  |  |  |  |  | $ | 64,226 |
Supplementary data | US-LAM |  | Canada |  | EMEA |  | APAC |  | Total
Intersegment revenue | $ | 46,892 |  |  | $ | 21,106 |  |  | $ | 2,779 |  |  | $ | 3,041 |  |  | $ | 73,818 |

For the year ended March 31, 2025 | US-LAM |  | Canada |  | EMEA |  | APAC |  | Total
Sales(1) | $ | 256,006 |  |  | $ | 158,969 |  |  | $ | 45,320 |  |  | $ | 37,912 |  |  | $ | 498,207 |
Adjustments(1) | 13,497 |  |  | (16,024) |  |  | 1,790 |  |  | 737 |  |  | — |
Sales reviewed by the CODM | $ | 269,503 |  |  | $ | 142,945 |  |  | $ | 47,110 |  |  | $ | 38,649 |  |  | $ | 498,207 |
Less:(2) |  |  |  |  |  |  |  |  |
Cost of sales | 142,200 |  |  | 80,886 |  |  | 27,648 |  |  | 24,577 |  |  | 275,311 |
Selling, general, and administrative expenses, adjusted(3) | 64,352 |  |  | 21,812 |  |  | 15,489 |  |  | 10,944 |  |  | 112,597 |
Segment profit | $ | 62,951 |  |  | $ | 40,247 |  |  | $ | 3,973 |  |  | $ | 3,128 |  |  | $ | 110,299 |
Reconciliation to Income before provision for income taxes: |  |  |  |  |  |  |  |  |
Deferred compensation plan (expense)/income |  |  |  |  |  |  |  |  | $ | (452) |
Depreciation and amortization |  |  |  |  |  |  |  |  | (22,339) |
Other unallocated enterprise expense(4) |  |  |  |  |  |  |  |  | (7,751) |
Interest expense, net |  |  |  |  |  |  |  |  | (10,325) |
Other income/(expense) |  |  |  |  |  |  |  |  | 687 |
Income before provision for income taxes |  |  |  |  |  |  |  |  | $ | 70,119 |
Supplementary data | US-LAM |  | Canada |  | EMEA |  | APAC |  | Total
Intersegment revenue | $ | 48,900 |  |  | $ | 16,571 |  |  | $ | 1,954 |  |  | $ | 2,944 |  |  | $ | 70,369 |

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For the year ended March 31, 2024 | US-LAM |  | Canada |  | EMEA |  | APAC |  | Total
Sales(1) | $ | 256,293 |  |  | $ | 155,319 |  |  | $ | 45,301 |  |  | $ | 37,716 |  |  | $ | 494,629 |
Adjustments(1) | 11,057 |  |  | (15,394) |  |  | 1,626 |  |  | 2,711 |  |  | — |
Sales reviewed by the CODM | $ | 267,350 |  |  | $ | 139,925 |  |  | $ | 46,927 |  |  | $ | 40,427 |  |  | $ | 494,629 |
Less:(2) |  |  |  |  |  |  |  |  |
Cost of sales | 144,713 |  |  | 83,453 |  |  | 28,213 |  |  | 26,686 |  |  | 283,065 |
Selling, general, and administrative expenses, adjusted(3) | 57,224 |  |  | 22,324 |  |  | 13,984 |  |  | 10,994 |  |  | 104,526 |
Segment profit | $ | 65,413 |  |  | $ | 34,148 |  |  | $ | 4,730 |  |  | $ | 2,747 |  |  | $ | 107,038 |
Reconciliation to Income before provision for income taxes: |  |  |  |  |  |  |  |  |
Deferred compensation plan (expense)/income |  |  |  |  |  |  |  |  | $ | (1,231) |
Depreciation and amortization |  |  |  |  |  |  |  |  | (18,837) |
Other unallocated enterprise expense(4) |  |  |  |  |  |  |  |  | (11,599) |
Interest expense, net |  |  |  |  |  |  |  |  | (8,845) |
Other income/(expense) |  |  |  |  |  |  |  |  | 1,148 |
Income before provision for income taxes |  |  |  |  |  |  |  |  | $ | 67,674 |
Supplementary data | US-LAM |  | Canada |  | EMEA |  | APAC |  | Total
Intersegment revenue | $ | 39,784 |  |  | $ | 18,162 |  |  | $ | 1,371 |  |  | $ | 3,363 |  |  | $ | 62,680 |

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(1) - "Sales" are attributed to the reportable segment on the basis of the physical location and jurisdiction of organization of the subsidiary that invoices the material and services. The sales reviewed by the CODM are attributed based on the business unit which made the sale. The adjustments shown above represent these differences. Therefore, we have adjusted the sales reviewed by the CODM to reconcile such Sales.
(2) - The significant expense categories and amounts align with the segment-level information that is regularly provided to the CODM.
(3) - Selling, general, and administrative expenses, adjusted (non-GAAP), represents the Selling, general, and administrative expenses less depreciation expense, other unallocated enterprise expense, and impairment and other charges.
(4) - Other unallocated enterprise expense includes miscellaneous corporate costs not allocated, such as stock-based compensation, miscellaneous gain/loss on sale of assets and other. The fiscal 2024 amounts include charges associated with the Russia Exit.
We do not provide segment asset information to our CODM, and as such, we do not have a segment assets measure. The following table represents our capital expenditures by reportable segment:

| March 31, 2026 |  | March 31, 2025
Capital expenditures, by reportable segment |  |  |
United States and Latin America | $ | 6,014 |  |  | $ | 4,347 |
Canada | 6,223 |  |  | 5,114 |
Europe, Middle East and Africa | 1,331 |  |  | 285 |
Asia-Pacific | 363 |  |  | 503 |
| $ | 13,931 |  |  | $ | 10,249 |

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
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ITEM 9A. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
Under the supervision and with the participation of the Company's management, including its Chief Executive Officer and Chief Financial Officer, the Company has evaluated the effectiveness of the design and operation of its disclosure controls and procedures pursuant to Rule 13a-15(b) under the Exchange Act as of the end of the period covered by this annual report. Based on that evaluation, the Company's Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this annual report, these disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed in the reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to the Company's management to allow timely decisions regarding required disclosure.
Management's Annual Report on Internal Control Over Financial Reporting
We, as management, are responsible for establishing and maintaining adequate internal control over the Company's financial reporting, as such term is defined in Rule 13a-15(f) under the Exchange Act. Our internal control system was designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that: (1) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.
Management assessed the effectiveness of the Company’s internal control over financial reporting as of March 31, 2026, based on the criteria set forth in the Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO").
Based on this assessment, management has concluded that, as of March 31, 2026, our internal control over financial reporting is effective.
KPMG LLP, the independent registered public accounting firm that audited the Company’s consolidated financial statements as of and for the year ended March 31, 2026, included in this annual report, has issued an attestation report on the effectiveness of the Company’s internal control over financial reporting as of March 31, 2026. The report is included in Item 8 of this annual report.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting during the quarter ended March 31, 2026, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
Securities Trading Plans of Directors and Executive Officers
During the three months ended March 31, 2026, none of our directors or executive officers adopted or terminated any contract, instruction or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement.”
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
None.
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PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Information About Our Executive Officers
The following table and biographies set forth certain information about our current executive officers (collectively, the "Executive Officers"). The names, positions and ages of the Executive Officers as of May 21, 2026, are listed below. Our Executive Officers are appointed by the Board and serve at the discretion of the Board. There are no family relationships among these officers, nor any arrangements or understandings between any Executive Officer and any other person pursuant to which the officer was selected.

Executive Officer |  | Title |  | Age
Bruce Thames |  | President & Chief Executive Officer |  | 63
Jan L. Schott |  | Senior Vice President, Chief Financial Officer |  | 57
David Buntin |  | Senior Vice President, Products and Technology |  | 56
Thomas Cerovski |  | Senior Vice President, Chief Operating Officer |  | 54
Candace Harris-Peterson |  | Senior Vice President, Human Resources |  | 47
Roberto Kuahara |  | Senior Vice President, Global Operations |  | 60
Ryan Tarkington |  | Senior Vice President, General Counsel & Corporate Secretary |  | 45
Greg Lucas |  | Vice President, Chief Accounting Officer |  | 50

Bruce A. Thames joined Thermon in April 2015 as Executive Vice President and Chief Operating Officer. He was promoted to President and Chief Executive Officer and appointed as a member of the Board on April 1, 2016. Prior to joining Thermon, Mr. Thames was Senior Vice President and Chief Operating Officer of TD Williamson in Tulsa, Oklahoma, a position he held since 2012. TD Williamson manufactures and delivers a portfolio of solutions to the owners and operators of pressurized piping systems for onshore and offshore applications. He joined TD Williamson in 2005 as Vice President, North America and also served as Vice President and General Manager, Eastern Hemisphere from 2010 to 2012. Mr. Thames began his career with Cooper Industries (formerly Intool), where he spent twelve years in various roles within the product engineering, marketing and operations groups. Mr. Thames then joined GE Energy (formerly Dresser Flow Solutions) ("Dresser") and served primarily as the Director of North American Operations and Product Director for Ball Valves globally for Dresser's Valve Group during his tenure from 2002 to 2005. Mr. Thames holds a B.S. in Mechanical Engineering from the University of Texas at Austin. Mr. Thames brings extensive leadership skills, international acumen, product innovation, operational experience in lean/six sigma and industry knowledge to the Board.
Jan L. Schott joined the Company in October 2024 as Senior Vice President and Chief Financial Officer, from TG Natural Resources LLC, an upstream development company with assets in East Texas and North Louisiana, where she served as Executive Vice President and Chief Financial Officer from 2019 through 2024. From 2015 through 2019, Ms. Schott was the Chief Financial Officer of Texas Crude Energy LLC, an independent oil and gas exploration company. Prior to joining Texas Crude Energy, LLC, Ms. Schott served for eight (8) years in various positions with Goodrich Petroleum Corporation (NYSE: GDP) ("GDP"), including as Senior Vice President and Chief Financial Officer. GDP filed for reorganization under Chapter 11 of the United States Bankruptcy Code in 2016. Ms. Schott holds a B.B.A. in Accounting from Texas A&M University and is a certified public accountant.
David Buntin joined the Company in January 2017 as Senior Vice President, Research and Development. In May 2020, Mr. Buntin was promoted to Senior Vice President, Thermon Heat Tracing and R&D and, in July 2025, Mr. Buntin was promoted to Senior Vice President, Products & Technology. Prior to joining the Company, from 2007 to 2016, Mr. Buntin served as Chief Operating Officer and Vice President Engineering for Enovation Controls, Inc., a company that provides instrumentation, displays, controls and fuel systems for natural gas engines and compressors as well as industrial and marine equipment. Before joining Enovation Controls, Inc., from 1998 to 2007, Mr. Buntin served as the Vice President of Engineering and Services for SecureLogix Corporation, a successful high-tech startup providing telephony and voice-over-IP security solutions. Prior to SecureLogix, from 1994 to 1998, Mr. Buntin served in various engineering roles of increasing responsibility with Southwest Research Institute. Mr. Buntin holds a B.S. in electrical engineering from Baylor University and a M.S. in electrical engineering from Texas A&M University.
Thomas Cerovski joined the Company in January 2019 as Senior Vice President, Global Sales. In July 2025, Mr. Cerovski was promoted to Chief Operating Officer. Prior to joining the Company, from 2018 until 2019, Mr. Cerovski was the Senior Vice President, Global Sales and Business Development for Trojan Battery Company, a leading manufacturer of deep-cycle batteries. From 2013 through 2018, Mr. Cerovski held various positions at Dover Corporation, a conglomerate
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manufacturer of industrial products, including Vice President and General Manager, Dispenser Business Unit, and Vice President, Product and Technology Services, Wayne Fueling Systems. Prior to joining Dover Corporation, Mr. Cerovski served for fourteen (14) years in various positions with General Electric Company. Mr. Cerovski began his career at the Nuclear Regulatory Commission. Mr. Cerovski brings more than twenty-five (25) years of energy industry leadership experience in positions ranging from engineering, product management, sales, business development, and business unit management. Mr. Cerovski holds a B.S. from Montana State University, a M.S from Purdue University, and a M.B.A. from George Washington University.
Candace Harris-Peterson joined the Company in January 2017 as Vice President of Human Resources. In March 2024, Ms. Peterson was promoted to Senior Vice President, Human Resources. Prior to joining the Company, from 2006 to 2016, Ms. Peterson was the Senior Business Partner, Global Sales and Services for TD Williamson, Inc., a global solutions provider to the owners and operators of pressurized piping systems for onshore and offshore applications. Ms. Peterson holds a B.A. in organizational leadership from Chapman University in Orange, California.
Roberto Kuahara joined the Company in February 2022 as Senior Vice President, Operations. Prior to joining the Company, Mr. Kuahara served as the Vice President of Manufacturing and Supply Chain, Continuous Improvement and EHS of SPM Oil & Gas, Inc., a subsidiary of Caterpillar, Inc. From 2011 to January 2021, Mr. Kuahara held various positions at the oil and gas division of Weir Group plc, including the Divisional Vice President of Operations, Continuous Improvement and EHS until the sale of the oil and gas division to Caterpillar, Inc. in February 2021. Prior to joining the Weir Group plc, Mr. Kuahara held various positions in the automotive manufacturing industry, including Ford Motor Company, Volkswagen and Dana Corporation when he was resident at Toyota Motor Company. Mr. Kuahara brings over thirty (30) years of experience in global multi-site manufacturing operations. Mr. Kuahara holds a B.S. in Mechanical Engineering from the University of Mackenzie.
Ryan Tarkington joined the Company in February 2019 as General Counsel and Corporate Secretary. In May 2022, Mr. Tarkington was promoted to Senior Vice President, General Counsel and Corporate Secretary. Prior to joining the Company, from 2011 to 2019, Mr. Tarkington served in various capacities with several international companies in the offshore drilling industry, including as Senior Counsel for Rowan Companies plc from 2017 through 2019, as Associate General Counsel for Paragon Offshore plc from 2014 through 2017 and as Senior Counsel for Transocean Ltd. from 2011 through 2014. Mr. Tarkington began his career at the law firm of Vinson & Elkins L.L.P. Mr. Tarkington holds a B.A. from Rice University and a J.D. from The University of Texas School of Law.
Greg Lucas was promoted to the role of Vice President and Chief Accounting Officer, effective October 2024, and has served as the Company’s principal accounting officer since April 2024. Between April 2024 and October 2024, Mr. Lucas also served as the Company’s interim Chief Financial Officer and principal financial officer. Prior to his role as interim Chief Financial Officer, Mr. Lucas served as the Company’s Corporate Controller since 2020, in which capacity he managed the Company’s accounting and financial reporting organization. Prior to joining the Company, Mr. Lucas was the Assistant Corporate Controller for BNSF Railway Company from 2019 to 2020, a leading freight transportation company. From 2017 to 2019, Mr. Lucas was the Controller of a region of Intertek Group plc, a global quality assurance provider. Prior to joining Intertek, Mr. Lucas served for seven (7) years in various roles of increasing responsibility at L'Air Liquide S.A., a global leader in air gases, technologies and services for industry and healthcare. Mr. Lucas is a certified public accountant and holds a B.B.A. from East Texas Baptist University and an M.B.A. from Texas A&M University.
Information concerning our directors will appear in our proxy statement for the 2026 Annual Meeting of Stockholders to be filed pursuant to Regulation 14A of the Exchange Act (Regulation 14A) on or before June 18, 2026 (the “2026 Proxy Statement”) under the caption “Director Biographies.” Such information is incorporated herein by reference.
Information concerning our Audit, Human Capital Management and Compensation, Finance, and Nominating and Corporate Governance Committees will appear in the 2026 Proxy Statement under the caption “Corporate Governance.” Such information is incorporated herein by reference. Our committee charters and corporate governance guidelines are available on our Investor Relations website located at http://ir.thermon.com.
Insider Trading Policy
The Company’s insider trading policy (the “Insider Trading Policy”) governs the purchase, sale and other disposition of the Company’s securities by our executive officers, directors, employees and independent contractors. We believe our Insider Trading Policy is reasonably designed to promote compliance with insider trading laws, rules and regulations, and applicable NYSE listing standards. It is also the policy of the Company to comply with all applicable securities laws when transacting in its own securities. A copy of our Insider Trading Policy is filed as Exhibit 19.1 to this annual report.
Code of Business Conduct and Ethics
We have adopted a written code of business conduct and ethics, which we refer to as our “code of conduct,” that applies to all of our employees, officers and directors. Our code of conduct is available on our Investor Relations website
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located at http://ir.thermon.com. Stockholders can also obtain a free copy of our code of conduct by writing to the General Counsel, Thermon Group Holdings, Inc., 7171 Southwest Parkway, Building 300, Suite 200, Austin, Texas 78735. We will post any amendments to our code of conduct, and any waivers that are required to be disclosed pursuant to SEC or NYSE rules, on our website.
ITEM 11. EXECUTIVE COMPENSATION
Information regarding executive and director compensation is incorporated by reference to the "Compensation Discussion and Analysis," “CEO Pay Ratio Disclosure,” and “Pay Versus Performance Disclosure” section of our Definitive Proxy Statement for the 2026 Annual Meeting of Stockholders.
The material incorporated herein by reference to the information set forth under the "HCMC Committee Report" in our Definitive Proxy Statement for the 2026 Annual Meeting of Stockholders shall be deemed furnished, and not filed, in this annual report and shall not be deemed incorporated by reference into any of our filings under the Securities Act of 1933 or the Securities Exchange Act of 1934 as a result of this furnishing, except to the extent that we have specifically incorporated such materials by reference.
Information regarding compensation committee interlocks and insider participation is incorporated herein by reference to the information under the heading "Corporate Governance-Compensation Committee Interlocks and Insider Participation" section of our Definitive Proxy Statement for the 2026 Annual Meeting of Stockholders.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
Information regarding security ownership of certain beneficial owners and management is incorporated herein by reference to the "Security Ownership of Certain Beneficial Owners and Management" section of our Definitive Proxy Statement for the 2026 Annual Meeting of Stockholders.
Information related to compensation plans under which our equity securities are authorized for issuance as of March 31, 2026 is set forth in the table below.
Equity Compensation Plan Information
The following table sets forth information regarding our equity compensation plans as of March 31, 2026. Specifically, the table provides information regarding our Stock Plans, described elsewhere in this annual report.

Plan Category |  | Number of securities to be issued upon exercise/vest of outstanding equity awards |  | Weighted-average exercise price of outstanding options |  | Number of securities remaining available for future issuances under equity compensation plans (1)
Equity compensation plans approved by security holders (2) |  | 551,229 |  |  | $ | 14.28 |  |  | 640,663 |
Equity plans not approved by security holders |  | — |  |  | — |  |  | — |
Total (3) |  | 551,229 |  |  |  |  | 640,663 |

(1) Excludes securities reflected in the column entitled "Number of securities to be issued upon exercise/vest of outstanding equity awards."
(2) On April 8, 2011, our board of directors and pre-IPO stockholders approved the Thermon Group Holdings, Inc. 2011 Long-Term Incentive Plan ("2011 LTIP"). The 2011 LTIP authorized the issuance of 2,893,341 equity awards. On May 21, 2020, the Board of Directors approved the Thermon Group Holdings, Inc. 2020 Long-Term Incentive Plan ("2020 LTIP"). The 2020 LTIP made available 1,400,000 shares of the Company's common stock that may be awarded to employees, directors, or non-employee contractors' compensation in the form of stock options or restricted stock awards.
(3) At March 31, 2026, the Company had outstanding (a) under the 2011 LTIP: (i) 35,719 stock options, with a weighted average exercise price of $14.28, and (b) under the 2020 LTIP (i) 256,447 unvested restricted stock units, with a weighted average grant date fair value of $26.97, and (ii) 256,506 performance units (assuming satisfaction of the performance metric at target and 513,012 at maximum), with a weighted average grant date fair value of $24.54.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Information regarding certain relationships and related transactions and director independence is incorporated herein by reference to the "Certain Relationships and Related Party Transactions" and "Corporate Governance-Director Independence" sections, respectively, of our Definitive Proxy Statement for the 2026 Annual Meeting of Stockholders.
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ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Our independent registered public accounting firm is KPMG LLP, located in Austin, Texas, PCAOB ID:185. Information regarding our principal accountant fees and services is incorporated herein by reference to the "Audit and Non-Audit Fees" section of our Definitive Proxy Statement for the 2026 Annual Meeting of Stockholders.
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PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
The following documents are filed as a part of this annual report:
1. Financial Statements: Included herein at Item 8.
2. Financial Statement Schedules: None. Financial statement schedules have been omitted because the required information is included in our consolidated financial statements contained elsewhere in this annual report.
3. Exhibits: See the Exhibit Index below. Each management contract and compensatory plan or arrangement required to be filed as an exhibit to this annual report is identified in the Exhibit Index by a single asterisk following its exhibit number.
Certain of the agreements included as exhibits to this annual report contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties have been made solely for the benefit of the other parties to the applicable agreement and:
•should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate;
•have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in such agreement;
•may apply standards of materiality in a way that is different from what may be viewed as material to you or other investors; and
•were made only as of the date of the applicable agreement or such other date or dates as may be specified in such agreement and are subject to more recent developments.
The registrant acknowledges that, notwithstanding the inclusion of the foregoing cautionary statements, it is responsible for considering whether additional specific disclosures of material information regarding material contractual provisions are required to make the statements in this annual report not misleading.
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EXHIBIT INDEX

Exhibit Number |  | Description
2.1 |  | Agreement and Plan of Merger, dated as of February 23, 2026, by and among the Parent, Merger Sub Inc., Merger Sub LLC and the Company (incorporated by reference to Exhibit 2.1 to the registrant’s Current Report on Form 8-K filed on February 24, 2026)
3.1 |  | Third Amended and Restated Certificate of Incorporation of Thermon Group Holdings, Inc., effective as of August 26, 2024 (incorporated by reference to Exhibit 3.1 to the registrant's Quarterly Report on Form 10-Q filed on November 7, 2024)
3.2 |  | Amended and Restated Bylaws of Thermon Group Holdings, Inc., effective as of January 31, 2023 (incorporated by reference to Exhibit 3.1 to the registrant's Quarterly Report on Form 10-Q filed on February 2, 2023)
4.1 |  | Specimen Common Stock Certificate (incorporated by reference to Exhibit 4.1 to Amendment No. 2 to Registration Statement on Form S-1 of the registrant filed on April 1, 2011)
4.2 |  | Description of Thermon Group Holdings, Inc.'s Common Stock (incorporated by reference to Exhibit 4.2 to the registrant’s Annual Report on Form 10-K for the fiscal year ended March 31, 2019, filed on June 12, 2019)
10.1 |  | Amended and Restated Credit Agreement, dated September 29, 2021, by and among Thermon Holding Corp., Thermon Canada Inc., the other financial institutions or entities party thereto from time to time and JPMorgan Chase Bank, N.A., as Administrative Agent (incorporated by reference to Exhibit 10.1 to the registrant's Current Report on Form 8-K filed September 30, 2021)
10.2 |  | Amendment No. 1 to the Amended and Restated Credit Agreement, dated November 19, 2021, by and among Thermon Holding Corp., and JPMorgan Chase Bank, N.A. (incorporated by reference to Exhibit 10.1 to the registrant's Quarterly Report on Form 10-Q filed February 3, 2022)
10.3 |  | Amendment No. 2 to Credit Agreement, Amendment No. 1 to the Guarantee and Collateral Agreement and Amendment No. 1 to the Canadian Guarantee and Collateral Agreement, dated as of March 7, 2023, by and among Thermon Group Holdings, Inc., Thermon Holding Corp., Thermon Canada, Inc. JPMorgan Chase Bank, N.A. and the Lenders party thereto (incorporated by reference to Exhibit 10.1 to the registrant's Current Report on Form 8-K filed March 9, 2023)
10.4 |  | Amendment No. 3 to Credit Agreement, Amendment No. 2 to the Guarantee and Collateral Agreement and Amendment No. 2 to the Canadian Guarantee and Collateral Agreement, dated as of December 29, 2023 (incorporated by reference to Exhibit 10.1 to the registrant's Current Report on Form 8-K filed January 2, 2024)
10.5 |  | Second Amended and Restated Credit Agreement, dated as of July 24, 2025, by and among Thermon Group Holdings, Inc., Thermon Holding Corp., Thermon Canada Inc., Thermon Europe B.V., the several lenders from time to time parties thereto, the Toronto-Dominion Bank, Wells Fargo Bank, National Association, and Fifth Third Bank, National Association and JPMorgan Chase Bank, N.A. (incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed on July 29, 2025)
10.6 |  | Amended and Restated Securityholder Agreement, dated as of April 30, 2010, among Thermon Group Holdings, Inc. and the other parties identified therein (incorporated by reference to Exhibit 10.5 to Registration Statement on Form S-4 of Thermon Industries, Inc. and additional registrants named therein filed on August 18, 2010)
10.7 |  | Amendment No. 1, dated as of April 1, 2011 and effective May 10, 2011, to Amended and Restated Securityholder Agreement, dated as of April 30, 2010, among Thermon Group Holdings, Inc. and the other parties identified therein (incorporated by reference to Exhibit 10.24 to Amendment No. 2 to the registrant's Registration Statement on Form S-1 (filed on April 1, 2011)
10.8 |  | Amendment No. 2, dated as of May 4, 2012, to Amended and Restated Securityholder Agreement, dated as of April 30, 2010, as previously Amended by Amendment No. 1, dated as of April 1, 2011 and effective as of May 10, 2011, among Thermon Group Holdings, Inc. and the other parties identified therein (incorporated by reference to Exhibit 10.1 to the registrant's Current Report on Form 8-K of Thermon Group Holdings, Inc. filed on May 10, 2012)
10.9 |  | Form of Voting Agreement. (incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed on February 24, 2026)
10.10† |  | Amended & Restated Thermon Group Holdings, Inc. 2011 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.1 to the registrant's Current Report on Form 8-K filed on August 6, 2013)
10.11† |  | Amendment No. 1 to the Thermon Group Holdings, Inc. 2011 Long-Term Incentive Plan, as adopted on July 31, 2014 (incorporated by reference to Exhibit 10.1 to the registrant’s Quarterly Report on Form 10-Q filed November 4, 2014)
10.12† |  | Form of Option Award Notice and Stock Option Agreement under Thermon Group Holdings, Inc. 2011 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.14 to Amendment No. 3 to Registration Statement on Form S-1 of the registrant filed on April 13, 2011)
10.13† |  | Form of indemnification agreement for directors and certain officers of Thermon Group Holdings, Inc. (incorporated by reference to Exhibit 10.22 to Amendment No. 2 to Registration Statement on Form S-1 of the registrant filed on April 1, 2011)
10.14† |  | Thermon Group Holdings, Inc. Amended and Restated Short-Term Incentive Plan (incorporated by reference to Exhibit 10.12 to the registrant's Annual Report on Form 10-K filed on May 22, 2025)

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10.15† |  | Form of Employee Stock Option Award Agreement under the Thermon Group Holdings, Inc. Amended and Restated 2011 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.4 to the registrant’s Quarterly Report on Form 10-Q filed August 6, 2020)
10.16† |  | Thermon Manufacturing Company Deferred Compensation Plan, effective as of July 1, 2016 (incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed June 21, 2016)
10.17† |  | Form of Employee Restricted Stock Unit Award Agreement under the Thermon Group Holdings, Inc., 2020 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.22 to the Registrant's Annual Report on Form 10-K/A filed May 27, 2021)
10.18† |  | Form of Employee RTSR Performance Unit Award Agreement under the Thermon Group Holdings, Inc., 2020 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.1 to the registrant's Quarterly Report on Form 10-Q filed August 5, 2021)
10.19† |  | Form of EBITDA Performance Unit Award Agreement under the Thermon Group Holdings, Inc., 2020 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.2 to the registrant's Quarterly Report on Form 10-Q filed August 5, 2021)
10.20† |  | Form of ROIC Performance Unit Award Agreement under the Thermon Group Holdings, Inc., 2020 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.24 to the registrant's Annual Report on Form 10-K filed May 25, 2023)
10.21† |  | Thermon Group Holdings, Inc. Executive Severance Plan, dated May 24, 2022 (incorporated by reference to Exhibit 10.26 to the registrant’s Annual Report on Form 10-K for the fiscal year ended March 31, 2022, filed May 26, 2022)
10.22† |  | Form of Employee Restricted Stock Unit Award Agreement under the Thermon Group Holdings, Inc., 2020 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.1 to the registrant’s Quarterly Report on Form 10-Q filed August 7, 2025)
10.23† |  | Form of EBITDA Performance Unit Award Agreement under the Thermon Group Holdings, Inc., 2020 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.2 to the registrant’s Quarterly Report on Form 10-Q filed August 7, 2025)
10.24† |  | Form of ROIC Performance Unit Award Agreement under the Thermon Group Holdings, Inc., 2020 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.3 to the registrant’s Quarterly Report on Form 10-Q filed August 7, 2025)
10.25†* |  | Form of Employee Restricted Stock Unit Award Agreement under the Thermon Group Holdings, Inc. 2020 Long-Term Incentive Plan
19.1 |  | Thermon Group Holdings, Inc. Insider Trading Policy (incorporated by reference to Exhibit 10.20 to the registrant’s Annual Report on Form 10-K for the fiscal year ended March 31, 2024, filed May 29, 2024)
21.1* |  | Subsidiaries of Thermon Group Holdings, Inc.
23.1* |  | Consent of KPMG LLP
31.1* |  | Certification of Bruce Thames, Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2* |  | Certification of Jan L. Schott, Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1* |  | Certification of Bruce Thames, Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2* |  | Certification of Jan L. Schott, Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
97.1† |  | Thermon Group Holdings, Inc. Policy on Recoupment of Incentive Compensation (incorporated by reference to Exhibit 97.1 to the registrant’s Annual Report on Form 10-K for the fiscal year ended March 31, 2024, filed May 29, 2024)
101* |  | Interactive Data Files Pursuant to Rule 405 of Regulation S-T: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations and Comprehensive Income (Loss), (iii) Consolidated Statements of Shareholders'/Members' Equity, (iv) Consolidated Statements of Cash Flows, and (v) Notes to Consolidated Financial Statements
104* |  | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

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† Management contract and compensatory plan or arrangement
* Filed herewith
ITEM 16. FORM 10-K SUMMARY
None.
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SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

| THERMON GROUP HOLDINGS, INC. (registrant)
Date: May 21, 2026 | By: |  | /s/ Jan L. Schott
| Name: |  | Jan L. Schott
| Title: |  | Senior Vice President, Chief Financial Officer (Principal Financial Officer)

| THERMON GROUP HOLDINGS, INC. (registrant)
Date: May 21, 2026 | By: |  | /s/ Greg Lucas
| Name: |  | Greg Lucas
| Title: |  | Vice President, Chief Accounting Officer (Principal Accounting Officer)

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Pursuant to the requirements of the Securities Exchange Act of 1934, this annual report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.

Date |  | Title |  |  | Signatures
May 21, 2026 |  | President and Chief Executive Officer |  | By: | /s/ Bruce Thames
|  | (Principal Executive Officer); Director |  |  | Bruce Thames
May 21, 2026 |  | Senior Vice President, Chief Financial Officer |  | By: | /s/ Jan L. Schott
|  | (Principal Financial Officer) |  |  | Jan L. Schott
May 21, 2026 |  | Vice President, Chief Accounting Officer |  | By: | /s/ Greg Lucas
|  | (Principal Accounting Officer) |  |  | Greg Lucas
May 21, 2026 |  | Chairman of the Board |  | By: | /s/ John U. Clarke
|  |  |  |  | John U. Clarke
May 21, 2026 |  | Director |  | By: | /s/ Linda Dalgetty
|  |  |  |  | Linda Dalgetty
May 21, 2026 |  | Director |  | By: | /s/ Roger L. Fix
|  |  |  |  | Roger L. Fix
May 21, 2026 |  | Director |  | By: | /s/ Marcus J. George
|  |  |  |  | Marcus J. George
May 21, 2026 |  | Director |  | By: | /s/ Victor Richey
|  |  |  |  | Victor Richey
May 21, 2026 |  | Director |  | By: | /s/ Dr. Angela Strzelecki
|  |  |  |  | Dr. Angela Strzelecki

84